Virtually all enrollees in Medicare Advantage (99%) are required to obtain prior authorization for some services – most commonly, higher cost services, such as inpatient hospital stays, skilled nursing facility stays, and chemotherapy. This contrasts with traditional Medicare, where only a limited set of services, including certain outpatient hospital services, non-emergency ambulance transport, and durable medical equipment, require prior authorization (see Box 1).

Prior authorization requirements are intended to ensure that health care services are medically necessary by requiring approval before a service or other benefit will be covered. Medicare Advantage insurers typically use prior authorization, along with other tools, such as provider networks, to manage utilization and lower costs. This may contribute to their ability to offer extra benefits and reduced cost sharing, typically for no additional premium, while maintaining strong financial performance. At the same time, prior authorization processes and requirements, including the use of artificial intelligence to review requests, may result in administrative hassles for providers, delays for patients in receiving necessary care, and in some instances, denials of medically necessary services, such as post-acute care.

This analysis uses data submitted by Medicare Advantage insurers to the Centers for Medicare and Medicaid Services (CMS) to examine the trends in the number of requests for prior authorization determinations, denials, and appeals for 2019 through 2023, as well as differences across Medicare Advantage insurers. It does not include determinations or denials by type of service or plan because CMS does not collect or report this information, though such data could help inform consumers in choosing among plans. It also presents data from CMS about the use of prior authorization in traditional Medicare, including the number of reviews and denials for 2021 through 2023, and the share appealed and the outcome of the appeal for 2021 and 2022 (the 2023 data do not include this information).

Key Takeaways:

• Medicare Advantage insurers made nearly 50 million prior authorization determinations in 2023, reflecting steady year-over-year increases since 2021 (37 million) and 2022 (46 million) as the number of people enrolled in Medicare Advantage has grown. The determinations represent requests for approval that providers are required to submit before providing a service. Substantially fewer prior authorization reviews for traditional Medicare beneficiaries were submitted to CMS – just under 400,000 in fiscal year 2023 – though the number of people enrolled in Medicare Advantage and traditional Medicare were similar in these years.
• In 2023, there were nearly 2 prior authorization determinations on average per Medicare Advantage enrollee, similar to the amount in 2019. In contrast, in 2023, about 1 prior authorization review was submitted per 100 traditional Medicare beneficiaries – a rate of about 0.01 per person — which reflects the limited set of services subject to prior authorization in traditional Medicare.
• In 2023, insurers fully or partially denied 3.2 million prior authorization requests, which is a somewhat smaller share (6.4%) of all requests than in 2022 (7.4%). Though there were substantially fewer prior authorization reviews for traditional Medicare beneficiaries, a larger share was denied – 28.8% in 2023.  Denial rates varied across the limited set of services subject to prior authorization in traditional Medicare.
• A small share of denied prior authorization requests was appealed in Medicare Advantage (11.7% in 2023). That represents an increase since 2019, when 7.5% of denied prior authorization requests in Medicare Advantage were appealed. A relatively small share of denied prior authorization reviews was appealed in traditional Medicare (6.4% in 2022) as well.
• Though a small share of prior authorization denials were appealed to Medicare Advantage insurers, most appeals (81.7%) were partially or fully overturned in 2023. That compares to less than one-third (29%) of appeals overturned in traditional Medicare in 2022. These requests represent medical care that was ordered by a health care provider and ultimately deemed necessary but was potentially delayed because of the additional step of appealing the initial prior authorization decision. Such delays may have negative effects on a person’s health.

Prior authorization practices have gotten a fair amount of attention in recent years. During the Biden Administration, CMS finalized three rules related to the use of prior authorization in Medicare Advantage. Among other changes, the three rules clarify the criteria that may be used by Medicare Advantage plans to establish prior authorization policies, streamline the prior authorization process for Medicare Advantage and certain other insurers, and require Medicare Advantage plans to evaluate the effect of prior authorization policies on people with certain social risk factors. In December 2024, the outgoing Biden Administration proposed further changes, including clarifying coverage requirements in Medicare Advantage. The Trump Administration will have an opportunity to modify or finalize these proposed changes and may propose additional regulatory changes. Additionally, lawmakers in Congress have held hearings, requested detailed data from the largest Medicare Advantage insurers, and introduced several bills to improve transparency and reform other aspects of prior authorization (see Box 2). Despite bipartisan support encompassing a majority of members in both houses of Congress, legislation on the use of prior authorization has not been enacted.

Use of Prior Authorization in Medicare Advantage

As part of its oversight of Medicare Advantage plans, CMS requires Medicare Advantage insurers to submit data for each Medicare Advantage contract (which usually includes multiple plans) that includes the number of prior authorization determinations made during a year, and whether the request was approved. Insurers are additionally required to indicate the number of initial decisions that were appealed (reconsiderations) and the outcome of that process, including whether the initial decision was affirmed, partially overturned, or fully overturned. These data are useful for assessing overall trends and variations across insurers, but do not contain the information necessary to understand how the use of prior authorization varies by type of service or type of plan.

In 2023, Medicare Advantage insurers made nearly 50 million prior authorization determinations.

After dropping in 2020 amid the initial phase of the COVID-19 pandemic, prior authorization determinations increased steadily between 2021 and 2023 (Figure 1). The decline in 2020 was likely due to both a decline in utilization, as well as the option for insurers to temporarily pause prior authorization requirements during the public health emergency.

The recent increase in the total number of prior authorization determinations since 2020 corresponds to an increase in Medicare Advantage enrollment. Between 2019 and 2023, the number of Medicare Advantage enrollees rose from 22 million people to 31 million people. In 2019, there were approximately 1.7 prior authorization determinations per Medicare Advantage enrollee. That number dropped at the onset of the COVID-19 pandemic to 1.4 in 2020 and 1.5 in 2021, before returning to the pre-pandemic level of 1.7 determinations per enrollee in 2022 and rising slightly to 1.8 in 2023 (Figure 2).

Medicare Advantage insurers denied 3.2 million (6.4%) prior authorization requests in 2023.

Of the 49.8 million prior authorization determinations in 2023, more than 90% (46.6 million) were fully favorable, meaning the requested item or service was approved in full. However, the remaining 3.2 million prior authorization determinations (6.4%) were unfavorable, meaning they were denied in full or in part by Medicare Advantage insurers. This is slightly lower than the 7.4% of requests that were denied in 2022 (which amounted to 3.4 million denials) (Figure 3). Both the share and number of requests denied was higher in 2023 than in 2019. Across all years, most denials (81% in 2023, data not shown) were denied in full, while a minority of denials were determined to be partially favorable, meaning that only part of the request was approved. For example, the insurer may have approved 10 of 14 requested therapy sessions.

Just 11.7% of denied prior authorization requests were appealed to Medicare Advantage insurers in 2023.

The majority of the 3.2 million denied prior authorization requests were not appealed, similar to previous years. In 2019, just 7.5% of all denials were appealed. That share increased somewhat in 2020 to 10.2% and was relatively stable in 2021 (10.6%) and 2022 (9.9%) (Figure 4). These include appeals of determinations that were both fully and partially denied.

The vast majority of denied prior authorization requests that were appealed were subsequently overturned by Medicare Advantage insurers.

From 2019 through 2023, more than eight in ten (81.7%) denied prior authorization requests that were appealed were overturned (Figure 5). This raises questions about whether the initial request should have been approved, although it could also indicate that the initial request was missing the required documentation to justify the service. In either case, patients potentially faced delays in obtaining services that were ultimately approved because of the prior authorization process.

Variation in Use of Prior Authorization Across Medicare Advantage Insurers in 2023

In 2023, the volume of prior authorization determinations varied across Medicare Advantage insurers, as did the share of requests that were denied, the share of denials that were appealed, and the share of decisions that were overturned upon appeal, meaning people may have different experiences depending on the Medicare Advantage plan in which they enroll.

Across most insurers, a higher number of prior authorization determinations per enrollee was correlated with a smaller share of requests being denied and vice versa. For example, prior authorization determinations for UnitedHealthcare and Humana, the two largest Medicare Advantage insurers, were among the highest (Humana, 3.1 determinations per enrollee) and lowest (UnitedHealthcare, 1.0 determinations per enrollee) observed, and correspondingly, denial rates were below average (Humana, 3.5%) and above average (UnitedHealthcare, 9.1%) for these insurers.

While all Medicare Advantage insurers require prior authorization for at least some services, there is variation across insurers and plans in the specific services that are subject to these requirements. In addition, some insurers waive prior authorization requirements for certain providers, for example, as part of risk-based contracts or through “gold carding” programs that exempt providers with a history of complying with the insurer’s prior authorization policies.

Prior authorization determinations were most common among Humana and Anthem plans.

The number of prior authorization determinations per enrollee ranged from a low of 0.5 determinations per enrollee in Kaiser Permanente plans to a high of 3.1 determinations per enrollee in Humana and Anthem plans (Figure 6). Kaiser Permanente is atypical among insurers in that it generally operates its own hospitals and contracts with an affiliated medical group. Looking across insurers that are more similar, the low end of the range was 1.0 determinations per enrollee in UnitedHealthcare plans. Differences across Medicare Advantage insurers in the number of prior authorization determinations per enrollee likely reflect some combination of differences in the services subject to prior authorization requirements, the frequency with which contracted providers are exempted from those requirements (which may be related to the extent to which providers are affiliated with the insurer), how onerous the prior authorization process is for a particular insurer relative to others, and differences in enrollees’ health conditions and the health care services they use.

Centene denied the highest share or prior authorization requests while Humana denied the fewest.

The denial rate ranged from 3.5% of prior authorization requests for Humana plans to 13.6% of prior authorization requests for Centene plans (Figure 7). The overall denial rate includes requests that were both fully and partially denied (adverse and partially favorable determinations, respectively).

Most insurers that had more prior authorization determinations per enrollee than average denied a smaller share of  requests than average and vice versa. Centene was an exception with both a relatively high number of prior authorization determinations (2.4 per enrollee) and the highest denial rate (13.6%).

Across all insurers, a small share of denials was appealed.

Fewer than one in five denied prior authorization requests were appealed across all firms. The shares ranged from 1.7% for Kaiser Permanente to 18.0% for Cigna (Figure 8).

Across most firms, at least two-thirds of appeals were successful.

Even though most denials were not appealed, when they were, most of the initial decisions were partially or fully overturned. The share of appeals that resulted in favorable decisions was lowest for Kaiser Permanente (42.4%) and highest for Centene (93.6%), which also had the highest share of requests initially denied (Figure 9).

The Use of Prior Authorization in Traditional Medicare

The use of prior authorization is relatively new to traditional Medicare and only used for a limited set of services, including certain outpatient hospital services, non-emergency ambulance transport, and durable medical equipment (see Box 1). The prior authorization process does not change any documentation requirements that are not already necessary for receiving Medicare payment – they are just required earlier in the process. CMS has recently published two reports presenting data on the use of prior authorization in traditional Medicare for fiscal years 2021, 2022, and 2023. These reports include information on the number of reviews completed and the number and share of reviews that were affirmed. For 2021 and 2022 only, the data also include information on appeals and the outcome of the appeal.

Just under 400,000 prior authorization reviews were completed by CMS for traditional Medicare in 2023.

Across the three categories of services that required prior authorization for certain services, there were 216,571 reviews completed in 2021, 260,986 reviews completed in 2022, and 393,749 reviews completed in 2023 (Figure 10). This translates to about 1 prior authorization review per 100 traditional Medicare beneficiaries in 2023 – a rate of about 0.01 per person.

About one-quarter of prior authorization reviews in traditional Medicare denied coverage of the service.

CMS approved (or affirmed) coverage in the majority of prior authorization reviews it completed. CMS reported that 24.8% of requests were denied (or non-affirmed) in 2021, 27.6% of requests were denied in 2022, and 28.8% of requests were denied in 2023 (Figure 11). This reflects 53,680 denied requests in 2021, 72,029 denied requests in 2022, and 113,448 denied request in 2023.

A small share of denied prior authorization requests in traditional Medicare was appealed to CMS.

In both 2021 and 2022, fewer than 5,000 denied prior authorization requests were appealed to the first level. As a share of all denied requests that translates into 8.7% appealed in 2021 and 6.4% appealed in 2022 (Figure 12). Appeals data are presented differently across the two CMS reports. Specifically, the 2023 report includes a separate claims and appeals section for each category of service, which appears to include a broader universe of reviews by Medicare Administrative Contractors, including those for payment of services rendered, than what is presented in the report for 2021 and 2022. Given the differences in the data reported, we present total appeals for 2021 and 2022 only.

Just over one-quarter of appeals to CMS overturned the denied prior authorization request in traditional Medicare.

In 2021, 1,365 prior authorization denials were overturned upon appeal. In 2022, 1,323 prior authorization denials were overturned upon appeal. That represents 28.7% of all first level appeals in 2022 (Figure 13).

The share of prior authorization reviews that were denied, appealed, and overturned varied across service type in traditional Medicare.

In 2022, the largest number of prior authorization reviews in traditional Medicare were for certain hospital outpatient department services (132,565), followed by reviews for certain durable medical equipment, prosthetics, orthotics and supplies (97,334), which are both applied nationwide. Repetitive, scheduled non-emergent ambulance transport had the fewest number of requests (31,087), which in part may reflect that it became a nationwide program after expanding to additional jurisdictions in 2022, as well as the ability to approve multiple ambulance rides through a single request (Figure 14).

Across the three service categories, denials were most common for repetitive, scheduled non-emergent ambulance transport (36.8%), followed by certain durable medical equipment, prosthetics, orthotics and supplies (33.1%), and least common for certain hospital outpatient department services (21.4%). Denied requests for the ambulance transport services were also most often appealed (19.6%); just 6.6% of denials for certain hospital outpatient services and 1.5% of certain durable medical equipment, prosthetics, orthotics and supplies requests were denied (Figure 14).

The share of appeals that resulted in overturning the initial decision also varied widely. Nearly two-thirds (63.9%) of appeals for durable medical equipment, prosthetics, orthotics and other supplies were successful. That compares to 26.3% of appeals for the ambulance transport services and 22.2% of appeals for certain hospital outpatient services (Figure 14).

Note: This brief was updated on January 29, 2025 to incorporate new data and policy changes on emergency contraception.

Emergency Contraception

Emergency contraception (EC) is a form of backup birth control that can be used up to several days after unprotected intercourse or contraceptive failure and still prevent a pregnancy. In 1999, Plan B was the first oral product approved for use in the U.S. as an EC by the Food and Drug Administration (FDA). Since then, more EC products have been approved. Many have confused EC pills with mifepristone, the “abortion pill,” but EC pills do not cause abortion. EC pills prevent pregnancy by delaying or inhibiting ovulation and will not work if the pregnancy is established. This fact sheet reviews the methods of EC, known mechanisms of action, use of EC, and current national and state policies affecting EC access.

What is EC?

EC is used as a back-up birth control method to prevent pregnancy in the event of unprotected sex, sexual assault, or a contraceptive failure, such as a condom breaking. ECs do not terminate a pregnancy, stop the implantation of a fertilized egg, or affect a developing embryo. There are several methods of EC that are available in the U.S. including progestin-based pills, ulipristal acetate, and intrauterine devices (IUDs) (Table 1). The copper and levonorgestrel IUDs can be used after unprotected sex and as ongoing regular contraceptive methods. EC pills are only to be used after unprotected sex and are not intended for use as a regular method.

Progestin-Based Pills

• Plan B was the first oral form of EC to be made available in the U.S. as a pre-packaged dose of pills containing the progestin, levonorgestrel. Now, there are generic alternatives available as well. Progestin-based EC pills use the same hormones found in daily oral contraceptives and are the most widely used form of EC. EC pills are marketed today under the brand name Plan B One-Step and generic names and are available over-the-counter, without a prescription/ (Table 1).
• Progestin-based EC pills do not interrupt or adversely impact an established pregnancy, nor are they medical abortion drugs like mifepristone or methotrexate that end an established pregnancy. Plan B One-Step and the generic versions prevent pregnancy by inhibiting or delaying ovulation or by making it harder for sperm to reach an egg.
• Progestin-based EC is to be taken within 72 hours of unprotected sex in order to be most effective and reduce the likelihood of pregnancy by 81% to 90% when taken in this timeframe.
• There are no known serious side effects associated with progestin-based EC; side effects may include bleeding or spotting, headaches, nausea, and breast tenderness.
• Some research has suggested that efficacy of progestin-based EC is lower among women with Body Mass Index (BMI) levels greater than 25. However, in May 2016 the FDA announced that it had reviewed the available scientific data regarding the effectiveness of EC pills in overweight and obese women, and that the data are inconclusive and did not recommend a labeling change.
• Progestin-based pills can be stored for several years, with Plan B One Step having a shelf-life of four years when stored as directed. Consumers should always check the expiration date on the packaging prior to taking the pill.

Ulipristal acetate: ella

• Ulipristal acetate, marketed as ella, was approved by the FDA in 2010 for sale and use in the U.S.
• ella is a single-dose (30 mg) pill that is effective in preventing pregnancy up to five days after unprotected intercourse, giving women a longer timeframe to prevent unintended pregnancy than Plan B. Its mechanism of action is similar to that of progestin-based EC.
• Study findings show that side effects for ella are comparable to those for Plan B, and some research suggests that its effectiveness appears to diminish at BMI thresholds above 35.
• A 2025 study based on a small sample of women in Mexico suggests that when paired with misoprostol, one of the two drugs used in the FDA’s approved abortion medication regimen, higher doses of ulipristal acetate (60 mg) can terminate a pregnancy. It has already been demonstrated that misoprostol alone terminates early pregnancies. Prior research has shown that a 30 mg dose of ulipristal acetate alone, the dose that is used for emergency contraception in the U.S., does not disrupt an established pregnancy.

Combined/Combination Pills

• Certain daily oral contraceptive pills can also act as EC when taken in doses four or five times higher than the daily dose, although they are not specifically sold as emergency contraception. Oral contraceptive pills contain progestin and estrogen and are taken in two doses 12 hours apart to be effective as EC.
• Combined pills have been found to be safe and effective for preventing pregnancy within 5 days of intercourse.

Copper-T IUD: Paragard

• Available to women since the 1970s, copper-T IUDs are the most effective forms of EC, reducing the risk of pregnancy by more than 99% when inserted within 5 days of unprotected intercourse. IUDs are inserted into the uterus by a health care provider and require a visit to a clinic or provider’s office. They also can be used to effectively prevent subsequent pregnancy for up to 10 years.
• The hormone-free copper-T IUD works by interfering with egg fertilization by preventing sperm from reaching the egg. Previous research suggests the copper IUD inhibits implantation of a fertilized egg, but this mechanism of action has not been conclusively proven.
• Efficacy of copper IUDs does not diminish in women who are overweight or obese.

Levonorgestrel IUD: Mirena and Liletta

• Levonorgestrel IUDs are a type of hormonal IUD that contain the progestin levonorgestrel. To date, only levonorgestrel IUDs that contain 52 mg of levonorgestrel (LNG 52 mg IUDs) have been studied as a form of EC. LNG 52 mg IUDs are marketed under the brand names Mirena and Liletta.
• Like copper-T IUDs, LNG IUDs are inserted into the uterus by a clinician and require a visit to a clinic. LNG IUDs can subsequently be used as a regular form of contraception for up to seven years.
• Levonorgestrel IUDs recently started being used as a method of EC, and research has found that LNG 52 mg IUDs can be as effective as copper-T IUDs when inserted within five days after unprotected intercourse or contraceptive failure. The hormonal IUD prevents egg fertilization by making the cervical mucus impenetrable to sperm.
• Efficacy of levonorgestrel IUDs does not diminish in women who are overweight or obese.

Women’s Use of EC Pills

There have been numerous public health and educational initiatives to increase use of EC. Use of EC pills has increased over the past 20 years. Between 2022 and 2023, the most recent years for which data are currently available, 33% of women ages 15 to 49 who have ever had sex with a male reported they had used EC pills at least once in their lives, an increase from 22% in 2015-2017 (Figure 1).

Younger women are more likely to report that they have ever used EC (Figure 2). More than four in ten women ages 15-24 (44%) and women ages 25-34 (40%) say they have taken EC pills, compared to 25% of women ages 35-49. One in four Hispanic women (40%) and approximately one in three Black and White women (30% and 33%, respectively) report ever taking EC.

Access and Availability

At least one form of oral EC has been available in the U.S. for over a decade and there have been several efforts to broaden women’s access to EC, particularly since its effectiveness window is time-limited.

Over the Counter Access of EC Pills

• Prior to 2006, a prescription was needed for all individuals seeking EC pills. Between 2006 and February 2014, Plan B and its generic equivalent were available without a prescription for men and women 17 and older, but adolescents under 17 needed a prescription.
• In 2014, the FDA removed point-of-sale age requirements for Plan B obtained over the counter (OTC) and generic versions began to enter the OTC market. Currently, several generic brands of EC pills, including Next Choice One Dose, My Way, Fall Back Solo, Take Action, levonorgestrel tablet, and Aftera are available OTC to women of all ages.
• A prescription is still required for ella for women of all ages.

Cost and Coverage

• The Affordable Care Act (ACA) requires most new private health plans (individual and group) to cover without cost-sharing all FDA-approved contraceptive drugs and devices as prescribed, including emergency contraception. This means that although OTC formulations are available without a prescription, the pills are only required to be covered by insurance if they were prescribed. Private insurance plans must also cover the cost of IUDs, as well as services related to insertion, follow up and removal, without cost sharing. However, there have been numerous reports of individuals having to pay out-of-pocket for contraception that they believe should have been fully covered, including for services related to the insertion and removal of IUDs.
• Seven states require private health insurance plans to cover some over-the-counter contraceptives, without any cost-sharing, including EC. For employer-sponsored plans, state coverage requirements generally apply only to fully-insured plans and not to self-funded plans.
• Family planning services are a required benefit under Medicaid. The coverage requirements under Medicaid are different for states that have expanded eligibility under the ACA. These programs must cover all prescribed, FDA-approved contraceptives, meaning that they must cover EC pills if a woman has a prescription. States have discretion in deciding whether they include EC in their traditional full-scope Medicaid programs or family planning expansion programs. A 2021 survey of state Medicaid programs found that while all responding states cover at least one form of EC in their traditional Medicaid programs, some states impose quantity limits. To increase access to contraception, eight states have opted to use state-only funds to cover at least some methods of OTC contraception for their Medicaid enrollees, primarily emergency contraception, without a prescription.
• Without a prescription or insurance, women in most states accessing EC OTC must pay the retail price. Plan B pills and the generic versions average can range from $10 to $50 when purchased OTC. Without insurance, the cost of IUDs can range from $500 to $1,300.
• Individuals without health insurance or who are ineligible for Medicaid may be able to obtain free or low-cost EC (in addition to other reproductive health care services) through a clinic or community health center participating in the federal Title X family planning program. The Title X program may also be an option for lower-income individuals covered by employer-sponsored health insurance plans that are not required to cover contraception because they existed prior to the ACA (known as “grandfathered” plans) or because their employer excludes coverage of emergency contraception based on a religious or moral objection to it. Regardless of the pathway, eligibility for the program is based on the individual’s household income and costs are based on a sliding fee scale.

Online Contraceptive Platforms

• New markets have emerged, particularly since the start of the COVID-19 pandemic, that allow people to obtain health care services without the need for an in-person visit, including several online reproductive health services platforms and smartphone apps where an individual can obtain hormonal contraceptives, including EC pills, outside of traditional health care settings. A 2023 KFF study on telecontraception found that 9% of survey respondents report getting a prescription for emergency contraception.
• These online platforms and apps typically employ licensed medical professionals to determine a client’s eligibility and to prescribe contraception in a similar manner to a clinic. The patient is then either mailed their contraceptives or their prescription is sent to a nearby pharmacy for pick-up.
• Some, but not all, of these platforms accept private insurance and/or Medicaid, and there is considerable variation in out-of-pocket costs for those who self-pay.

Provision of EC in Health Care Settings

• Several major medical and public health organizations, such as the American Academy of Pediatrics, American College of Obstetricians and Gynecologists, and the American Public Health Association, endorse the use of EC and advocate for broader access to EC.
• Counseling and coverage of EC is included as a standard of care in the federal requirements for providing Quality Family Planning Services (QFP). Providers are encouraged to discuss EC with their patients, inform them of its availability, and provide them with an advanced supply of EC pills if the patient requests them. Advance provision of EC can increase the chances that someone will have EC on hand and use it when needed, but research has found that few clinicians regularly provide advance provision of EC pills.
• There have been ongoing efforts to make EC more readily available to survivors of sexual assault. Currently, 21 states and the District of Columbia require that emergency room staff provide EC to women after sexual assault (Figure 3). However, some studies have documented that a sizable share of clinicians are not fully informed about EC options, safety, and efficacy. Additionally, some community health centers have reported challenges stocking IUDs due to high costs.
• In 2015, Indian Health Service (IHS) clarified its policy on access to the OC pill for Native American women, including that a prescription or age verification to access Plan B is not required.

Availability and Access in Pharmacies

• Nine states have laws that allow pharmacists to directly prescribe and dispense EC to women of all ages without obtaining a clinician’s prescription.
• Four states have measures that require pharmacies or pharmacists to fill all valid prescriptions. These policies have been enacted, in part, in response to reports of pharmacists refusing to fill prescriptions for EC pills because they oppose its use on moral or religious grounds.
• Ten states have laws allowing pharmacies or pharmacists to refuse to dispense EC pills on the basis of moral or religious objections.
• Pharmacies are not required to stock EC pills and some studies show that EC pills that may be sold OTC are not consistently stocked on store shelves and are sometimes kept behind the counter or in a locked display due to the high cost of the product. This report also documented misinformation regrading age and ID requirements among pharmacy staff and consumers.

As President Trump begins his second term, the public’s trust in health information from key health agencies has fallen over the past 18 months, continuing a decline that began during the COVID-19 pandemic, finds the new KFF Tracking Poll on Health Information and Trust. 

Just over half (53%) of the public now says they trust the Food and Drug Administration (FDA) to make the right recommendations on health issues at least “a fair amount,” down from nearly two-thirds (65%) in June 2023. The share who says they trust their state and local public health officials fell a similar amount (to 54% now from 64% in 2023). Trust in health recommendations from the Centers for Disease Control and Prevention (CDC) also dipped slightly from 66% in 2023 to 61% now. 

When asked about other health institutions, two-thirds (66%) of the public say they trust scientists at the National Institutes of Health, and just over half trust the Department of Health and Human Services (HHS) (55%) and the Centers for Medicare and Medicaid Services (CMS) (54%) to make the right recommendations on health issues. 

Republicans are far less trustful of each of these health institutions than Democrats, with independents in the middle.

An even larger partisan divide in the opposite direction exists in trust in health information from President Trump and Robert F. Kennedy Jr., his nominee to be HHS Secretary.

Less than half the public overall trust President Trump (42%) and Kennedy (43%) to make the right recommendations on health issues. Among Republicans, however, similar shares say they trust President Trump (84%) and Kennedy (81%) as say they trust their own doctors (84%). 

The public overall continues to place the most trust in their own doctors, though the share who say they trust their own doctors’ health recommendations “a great deal” or “a fair amount” is down from 93% in 2023 to 85% now, mostly due to declining trust among independents and Republicans.

Attitudes Toward Childhood Vaccines Remain Positive, Though Eroding Among Republicans

While large shares of the public continue to express positive attitudes toward childhood vaccines and school vaccination requirements, the poll reveals some erosion in support among Republicans and parents.

About eight in ten (82%) parents of children under age 18 now say they normally keep their child up to date with recommended childhood vaccines such as the one for measles, mumps, and rubella (MMR), down 8 percentage points from 2023.

About one in six (17%) now report delaying or skipping some shots, up from 10% in 2023. The shift is most pronounced among Republican parents: About one in four (26%) now report skipping or delaying some vaccines for their children, up from 13% in 2023.

A large majority of the public continues to believe that the benefits of the MMR vaccines outweigh the risks (80%), while about one in five (18%) say that the risks outweigh the benefits. Among parents, about seven in 10 (72%) say the vaccines’ benefits outweigh the risks, while a quarter (25%) say the risks outweigh the benefits. Republican-leaning parents are twice as likely as Democratic-leaning parents to say that the vaccines’ risks outweigh the benefits (33% vs. 15%), though large majorities of each group continue to say the benefits outweigh the risks.During his campaign, President Trump had vowed to cut federal funding to schools with vaccine mandates, though the poll suggests large majorities of the public and of parents across political parties support such requirements.

Among the public overall, 83% say public schools should require some vaccines for students, allowing for health and religious exceptions. This includes large majorities of Democrats (93%), independents (85%) and Republicans (75%).

Among parents, three-quarters (76%) say public schools should require vaccines, while one in four (24%) say they should not. Two-thirds (66%) of Republican and Republican-leaning parents favor schools requiring vaccines, while a third (34%) say that schools should not require any vaccines.

Other findings include:

• About two-thirds (63%) of adults overall and parents (67%) say they have heard the false claim that the MMR vaccines have been proven to cause autism in children. Just 3% of adults say this false claim is “definitely true.” One-third (33%) say it is “definitely false.” The rest are somewhat uncertain what to believe, saying the claim is either “probably true” (20%) or “probably false” (41%).
• Parents who say that the false claim that MMR vaccines are proven to cause autism is definitely or probably true are much more likely to say they have delayed or skipped some vaccines for their children than parents who say it definitely or probably false (37% and 8%, respectively).
• When asked about the H5N1 bird flu in the U.S., about one in three (34%) say they are “very” or “somewhat” concerned that they or a family member will get sick. About four in 10 (44%) say they are “very” or “somewhat concerned” that there will be a widespread outbreak in the U.S.
• Looking toward the future, a larger share of adults say the U.S. government is now more prepared (40%) rather than less prepared (26%) to deal with a pandemic or widespread health crisis than it was in 2020. Similar shares of adults across partisanship, age, race, and ethnicity say the government is more prepared than it was before.

Designed and analyzed by public opinion researchers at KFF, the survey was conducted Jan. 7-14, 2025, online and by telephone, among a nationally representative sample of 1,310 U.S. adults in English and in Spanish. The margin of sampling error is plus or minus 3 percentage points for the full sample. For results based on other subgroups, the margin of sampling error may be higher.

HealthCare.gov insurers denied nearly one out of every five claims (19%) submitted for in-network services and an even larger share (37%) share of claims for out-of-network services in 2023, a new KFF analysis finds.

The analysis examines the main source of publicly available data on claims denials and appeals for individual-market plans available through the federal HealthCare.gov marketplace. The Affordable Care Act requires certain entities to report data about claims denials and appeals to encourage transparency about how insurance coverage works for enrollees. The publicly available data does not include marketplace plans sold on state-based marketplaces or employer health plans, the nation’s primary source of private health coverage.

The analysis finds a huge variation across HealthCare.gov insurers, which had in-network denial rates as low as 1% and as high as 54% in 2023 in some states. Nationwide, high-volume insurers with higher in-network denial rates across HealthCare.gov states included Blue Cross Blue Shield of Alabama (35% for its 12 plans in that state), UnitedHealth Group (33% across 274 plans in 20 states), Health Care Service Corporation (29% across 915 plans in four states), Molina Healthcare (26% across 72 plans in nine states), and Elevance Health (23% across 154 plans in seven states).

Of limited information available on in-network claims denial reasons, the most common reason for denial was a general “other” reason (34%), while 16% involved excluded services, 9% involved lack of prior authorization or referral, and 6% involved medical necessity. Other common reasons for denials included administrative issues (18%) and exceeding benefit limits (12%).

Consumers appealed about 1% of denied in-network claims in 2023. Following those appeals, insurers often upheld their initial denials (56%), and consumers rarely took the next step to file an external appeal.

The analysis examines data from the Centers for Medicare and Medicaid Services on 425 million claims submitted to 175 insurers selling marketplace coverage in 2023, the most recent year available. Additional data files with insurer- and state-specific information are available at kff.org.

The Affordable Care Act (ACA) requires insurers to report transparency data for all non-grandfathered health plans sold on and off the Marketplace, including fully-insured and self-insured employer group health plans. The law requires data to be available to federal and state insurance regulators and to the public. However, federal implementation of this requirement has so far been limited to qualified health plans (QHP) offered on the federally facilitated Marketplace (HealthCare.gov) and does not include QHPs offered on state-based Marketplaces or group health plans. This brief analyzes federal transparency data released by the Centers for Medicare and Medicaid Services (CMS) on claims denials and appeals for non-group qualified health plans (QHPs) offered on HealthCare.gov in 2023. A downloadable working file based on CMS’s public use file is available on the right-hand side of this brief.

Key Takeaways

• Insurers of qualified health plans (QHPs) sold on HealthCare.gov denied 19% of in-network claims in 2023 and 37% of out-of-network claims for a combined average of 20% of all claims.
• The in-network denial rate ranged from 1% to 54%. There was significant variation by insurer and by state.
• Of limited information available on in-network claims denial reasons, the most common reason cited by insurers was “Other” at 34% followed by administrative reasons (18%), excluded service (16%), lack of prior authorization or referral (9%), and only 6% based on lack of medical necessity.
• Consumers rarely appeal denied claims (fewer than 1% of denied claims were appealed) and when they do, insurers usually uphold their original decision (56% of appeals were upheld).
• Marketplace enrollees filed 5,000 external appeals in 2023, or 3% of all upheld internal appeals. Due to the suppression of small values, the rate at which external appeals were upheld could not be calculated.

Introduction

The impact of claims denial is widely recognized by enrollees. The 2023 KFF Survey of Consumer Experiences with Health Insurance found that 58% of insured adults said they have experienced a problem using their health insurance, including denied claims. Four in ten (39%) of those who reported having trouble paying medical bills said that denied claims contributed to their problem.

As a part of the annual QHP certification process, issuers (referred to as insurers in this brief) must report certain denied claims information to CMS for plans that were offered in the previous year that they want to offer in the upcoming year. Data does not include information about denied requests for prior authorization (a claim decision made before a service is provided). The dataset only includes information about claims for benefits (medical and prescription drugs combined) made after a service was provided (post-service claims).

Insurers participating in the Marketplace in 2025 reported aggregated data on all HealthCare.gov QHPs they offered in 2023. Additionally, plan-level data from 2023 are reported for plans returning in 2025, including the number of in- and out-of-network claims submitted and denied, and reasons for claims denials. Among insurers participating in HealthCare.gov states in 2023, 43 are not participating in 2025 so they did not provide claims denial information. Among returning insurers, such denial information was only reported for 69% of their claims (the share of claims attributable to returning plans), as not all plans offered in 2025 were also offered in 2023.  Additionally, only 40% of plans in the dataset were offered in 2023 and are included in the plan-level reporting for denial reasons. See the Methods and Data Limitations section for more details.

Claims Denials and Appeals in 2023

Insurer-level Claims Denials Data

Insurers reported receiving 425 million claims in 2023, with 92% (392 million claims) filed for in-network services. Of these in-network claims, 73 million were ultimately denied, resulting in an average in-network denial rate of 19% (Figure 1). Out-of-network claims totaled 33 million, with an overall higher denial rate of 37%. Claims that were initially denied then subsequently resubmitted and paid are not included as denied claims in the denial rate.

Although the composition of HealthCare.gov states has continued to change since the inception of transparency reporting, the overall in-network denial rate in 2023 is similar to those from other analyses conducted by KFF (Figure 2).

Insurer denial rates for in-network claims received in 2023 varied widely, ranging from 1% to 54%. Twenty-two of the 175 reporting insurers had an in-network denial rate of less than 10% while twenty-nine insurers had a denial rate of 30% or more (Figure 3).

Denial rates also varied geographically, as shown in Figure 4. The state with the highest average in-network denial rate for HealthCare.gov insurers was 34%, in Alabama, and the lowest was 6%, in South Dakota. Average denial rates have the potential to obscure variation. For example, while the average denial rate for insurers in Florida (16%) was slightly below the national average (19%), denial rates for insurers in Florida had more variability than another other state included in this analysis, ranging from 8% to 54% (the highest single insurer-level denial rate in the country).

Limited ACA transparency data collected by the federal government continue to show wide disparities in the rate at which Marketplace plans pay claims. While HealthCare.gov insurers denied an average of 19% of in-network claims in 2023, some insurers reported denying a much higher share. Table 1 shows denial rates for claims filed by parent companies that received more than 5 million claims within HealthCare.gov states in 2023. For in-network claims processed by these parent companies, the average in-network denial rate was 19%, ranging from 13% to 35% by parent company. (Blue Cross and Blue Shield parent companies from different states are separated in this table because they operate independently.)

Plan-level Claims Denial Data

In all, insurers reported on 49 million denied in-network claims at the plan level for the 2023 coverage year. Denial rates varied only slightly between most plan metal levels. On average, in 2023, HealthCare.gov insurers denied 19% of in-network claims in their bronze plans, 18% in silver plans, 18% in gold plans, 15% in platinum plans, and 27% in catastrophic plans (Figure 5).

CMS requires HealthCare.gov insurers to report the reasons for in-network claims denials at the plan level. Specified denial reason categories include:

• Denials due to lack of prior authorization or referral
• Denials due to an out-of-network provider
• Denials due to an exclusion of a service
• Denials based on medical necessity (reported separately for behavioral health and other services)
• Denials due to enrollee benefit reached
• Denials due to a member not being covered
• Denials due to investigational, experimental, or cosmetic procedure
• Denials for administrative reasons (which include claims that were duplicate, missing information, untimely, for an unapproved provider, or that met other criteria)
• Denials for all other reasons not specified above.

Denials due to enrollee benefit reached (such as a limit on the number of physical therapy visits allowed per year); member not being covered at the time of service; investigational, experimental, or cosmetic procedure; and administrative reasons were reported on for the first time for 2022 data (in filings for application for the 2024 plan year).

A claim might be denied for more than one reason and on more than one submission. For example, if the initial submission of a claim misspelled a patient’s name and was denied because the patient could not be identified, the claim may be denied again after being corrected and resubmitted if the claim were for a service that was not covered. Additionally, denial reasons are also reported for claims that are ultimately paid if they are resubmitted to correct the deficit or are successfully appealed. Insurers reported about 71 million denial reasons for in-network claims that were denied at some point in the adjudication process. The adjudication process employed by the insurer may affect how denial reasons are reported. Although publicly reported data allow for multiple reasons throughout the life of a claim, in practice, insurers may file denial reasons sequentially and not capture all applicable reasons for denying claims, such as denying claims from an unidentifiable enrollee before determining whether the claim was for a medically necessary procedure.

The distribution of in-network denials by reason is shown in Table 2. Of in-network claims, about 16% of denials were because the claim was for an excluded service, 9% due to lack of prior authorization or referral, and only about 6% based on medical necessity. The share of denial reasons related to administrative reasons is 18%, the most common reason aside from “other” (34%). The share of denial reasons attributed to “other” reasons in 2023 is significantly smaller compared to the 2021 data due to the reporting of new specific denial reasons, notably administrative reasons. Among all in-network claims filed, 6% required a resubmission (not necessarily for administrative reasons though). A resubmission may occur when the original claim was incomplete, contained errors, or was rejected for non-compliance with billing guidelines.

Insurers also had wide variability in their use of denial reasons. While about 6% of all in-network claims denials by HealthCare.gov plans were based on medical necessity, several plans reported much higher shares for medical necessity reasons. For example, 30% of denial reasons for Cigna HealthCare of North Carolina were due to medical necessity. Similarly, while about 9% of all in-network denials by HealthCare.gov plans were based on lack of prior authorization or referral, some plans reported a much larger share. For example, 97% of denial reasons for Blue Cross Blue Shield of Arizona were for lack of prior authorization or referral.

Plans may apply utilization review techniques differently. For example, individual insurer policies and practices may affect the balance between denials for failure to obtain referral/prior authorization and medical necessity denials, as greater use of prior authorization would shift utilization review to before a service is provided and possibly decrease the number of denials due to medical necessity. However, without more detail on the types of claims subject to these denials, it is not possible to discern the possible implications for patients. Recent federal regulations may provide further insight into the prior authorization process and what services typically require prior authorization for Healthcare.gov plans. Furthermore, denials captured in this data do not reflect the share or types of services covered by insurers.

Appeals Data

CMS requires insurers to report the total number of denied and internally appealed claims at the insurer level. Internal appeal is a process that allows a consumer to challenge a denied claim made by their health insurer. As in KFF’s previous analysis of federal claims denial data, we find that consumers rarely appeal denied claims and when they do, insurers usually uphold their original decision.

Appeal to Insurer (Internal Appeal). Of the 73 million in-network denied claims in 2023, HealthCare.gov consumers appealed 376,527 – an appeal rate of less than 1%. Insurers upheld 211,393 (56%) denials on appeal. Relatedly, the 2023 KFF Survey of Consumer Experiences with Health Insurance found that only one in ten insured adults who reported experiencing a problem with their insurance in the past year had filed a formal appeal.

Appeal to Third Party (External Appeal). Consumers whose denial is upheld at internal appeal may have the right to an independent external appeal (also called external review) for certain types of claims. Among insurers that reported at least 10 external appeals in 2023, Marketplace enrollees externally appealed at least 5,000 claims in 2023 (CMS suppresses reporting of observations lower than 10 so the number of externally appealed claims could be higher). Among insurers that reported at least 10 external appeals in 2023, 3% of upheld appeals were externally appealed. Due to the suppression of small values, the rate at which external appeals were upheld could not be calculated.

It is not well known that consumers can appeal claims denials through an external appeal process. KFF’s 2023 consumer survey found that just 40% of consumers believed they have a legal right to appeal to a government agency or independent medical expert, while 51% said they were unsure if they had appeal rights, and 9% did not believe they had this right. Furthermore, Marketplace enrollees (34%) were less likely to know they had external appeal rights compared to those with Medicare (58%) and Medicaid (45%).

Other Data Sources

Absent data on how often insurers in other markets deny claims, it is difficult to put ACA transparency data in context. Below are other sources of claims denial data.

Covered California

California requires insurers to report data on claims received and denied each year for both in- and out-of-network services, in a manner similar to HealthCare.gov insurers. Among insurers submitting complete 2023 claims data to Covered California, the in-network denial rate was 21%, similar to HealthCare.gov insurers. One insurer had a denial rate of 87%. When excluding this insurer from the analysis, the overall claims denial rate among Covered CA insurers was 19%.

Specified denial reason categories are the same for both Marketplaces. At the plan-level, about 14% of in-network denials were due to lack of prior authorization or a referral, followed by about 6% due to administrative reasons, and about 1% for lacking medical necessity.

The appeal rate for Covered CA insurers (1%) was similar to HealthCare.gov insurers. Among all Covered CA insurers with complete data, about 40% of internal appeals and 47% of external appeals filed were upheld, substantially lower than HealthCare.gov insurers. Like denials, one insurer also represented a large share of the appeals data reported. When excluding that insurer, the rate of internal appeals upheld by Covered CA insurers was 61%.

Connecticut Health Insurance Report Card

Connecticut law requires private health insurers in all market segments with at least 1,000 enrollees to report annual data on claims payment practices, prior authorization requests and denials, claims denial reasons, and several other metrics (Table 3). The state insurance department publishes the aggregated data at the insurer level in its annual Consumer Report Card, which includes data from the largest insurer and is intended to inform consumer decision-making. Claims denial data include the total number of claims received and the total number of claims denied by reason.

Insurers in Connecticut reported receiving more than 11.8 million claims and denying more than 2.7 million claims in 2023, for an overall denial rate of 23%. In 2023, the largest shares of claims denials were for reasons related to the benefit not being covered (11.4% of denials) and for other reasons not specified (62.4%).

Connecticut’s claims denial data are not directly comparable to those reported by Covered CA or HealthCare.gov insurers for several reasons, including that Connecticut’s data includes group health plans, denial reasons are reported at the insurer level rather than the plan level, and claims data in Connecticut are not separated by network status.

National Association of Insurance Commissioners

The National Association of Insurance Commissioners (NAIC), via the Market Conduct Annual Statement (MCAS), collects uniform data annually on claims denials, prior authorization requests, appeals, and more from many insurers in the individual and group markets in nearly every U.S. state. MCAS data are intended to help state insurance regulators monitor the market conduct of insurance companies, and insurers can use this information to identify areas to improve performance. However, full MCAS health insurance data are shared with state regulators only, not the general public or CMS. A limited national summary published by the NAIC shows that the average claims denial rate for both in- and out-of-network claims (excluding pharmacy) in 2023 was about 16%.

Medicare Advantage and Medicaid Managed Care

Medicare Advantage plans have come under scrutiny in recent years over concerns about policies and processes related to claims and prior authorization denials. According to a 2024 KFF analysis of federal data, Medicare Advantage plans denied (fully or partially) 3.4 million prior authorization requests for health care services in 2022, for an overall denial rate of about 7%, a share that has increased over the past few years. (Prior authorization is a process used by health insurers that requires providers to obtain approval before a service or other benefit is covered.) Additionally, a 2018 federal report found that 8% of claims and prior authorization requests (combined) submitted to Medicare Advantage plans between 2014 and 2016 were denied by insurers, which was less than half the denial rate reported, on average, by HealthCare.gov insurers during that period.

Medicaid managed care organizations (MCOs) also may require prior authorization. A 2023 federal report found that Medicaid MCOs denied more than 2 million prior authorization requests in 2019 for an overall prior authorization denial rate of nearly 13%–more than 2 times higher than the Medicare Advantage rate. However, these data are not directly comparable to the HealthCare.gov data being analyzed for this report, as the former pertains specifically to prior authorization denials while the latter covers post-service claims denials.

Looking Forward

Although research and investigations into health insurer practices have garnered attention from lawmakers and patient advocates over the past several years, the December 2024 killing of UnitedHealthcare’s CEO ignited broad public outrage over insurer claims denials. According to a January 2025 KFF public opinion poll asking about certain health care priorities for Congress and the Trump administration, most people (55%) say more closely regulating insurers’ decisions to approve or deny claims for health services or prescription drugs should be a “top priority.” While prospects for significant changes in response to the public outrage may be limited, interest in providing the public with more transparency about how insurer claims review and appeals operate could, in the same way as providing more accurate price transparency information, better enable consumers and employers to make more informed choices when purchasing private coverage. Efforts might include:

Including more specific information in existing datasets.

Using the current data, the proportion of claims denied for a given reason cannot be calculated. For example, it is not possible to know the share of services that were denied due to a lack of medical necessity. Federal reporting on denials could be more useful when presented as claims ever denied for a given reason, instead of tallying the total reasons. Also, reporting that includes denial information about all claims from all insurers in the previous year, and not just those attributable to plans that are returning to the Marketplace next year, could be useful. Additionally, information about the types of services approved and denied (e.g., specialty of service and type of prescription drug) would give a more comprehensive picture of insurer practices and what type of care was actually covered by an insurer or employer. Information about appeals, especially external appeals, could provide insight into how this consumer protection mechanism is working for patients. Information about what services required prior authorization and how often the prior authorization itself is approved and denied is another data element not included in the CMS Marketplace public use file but is included in NAIC MCAS data not available to the public.

Providing claims denial information about employer coverage.

Employer-sponsored insurance covered 154 million people under 65 in 2023. Since most Americans have employer-sponsored coverage, efforts to provide more information to this group may be a way to begin to address concerns about insurer denials. A proposed regulation from 2016 that was never finalized would have added a claims denial metric to reporting required under the Employee Retirement Income Security Act of 1974 (ERISA). Also, in 2024, some members of Congress, urged the Department of Labor (DOL) to collect information on claims and claims denial, citing reports of “widespread denials of health benefits.” An outside advisory panel to DOL also recently issued recommendations for increased data collection, among other claims and appeal reforms in this area. Also, federal mental health parity regulations updated in 2024 will require employer plans (and non-group plans) to collect and evaluate certain data, including the number and percentage of certain claims denials.

State-level initiatives.

There has been some activity at the state level to provide more transparency into claims denials and prior authorization requests. For example, in addition to California’s and Connecticut’s requirements for reporting claims denial data, Vermont requires insurers of state-regulated plans to report certain pre- and post-service claims denial data to the state, including breakdowns by mental health, substance use disorder services, and prescription drugs. Insurers in Oregon are required to report to the state claims denial and appeals data for behavioral health services compared to certain medical and surgical services. Additionally, Washington state requires insurers to report certain data related to prior authorization requests to the state, issue prior authorization determinations within certain timeframes, and use a standardized and streamlined prior authorization process. All of these states make at least some of this information available to the public annually. Going forward, more states may act to enact similar initiatives at the state level. These state laws, however, do not apply to self-insured health plans sponsored by private employers, which cover most insured Americans under age 65. Absent more uniform and complete data at a national level, efforts to fully understand and address issues related to health insurance claims denials will remain limited.

Section 1115 Medicaid demonstration waivers offer states an avenue to test new approaches in Medicaid that differ from what is required by federal statute, if [in the HHS Secretary’s view] the approach is likely to “promote the objectives of the Medicaid program.” They can provide states additional flexibility in how they operate their programs, beyond the considerable flexibility that is available under current law. Waivers generally reflect priorities identified by states as well as changing priorities from one presidential administration to another. Nearly all states have at least one active Section 1115 waiver and some states have multiple 1115 waivers. This brief explains what Section 1115 waivers are and how they are used, summarizes key waiver requirements, and outlines the application and approval process.

What are waivers and how are they used?

Authority & Purpose. Under Section 1115 of the Social Security Act, the Secretary of Health and Human Services (HHS) can waive certain federal Medicaid requirements.¹  In addition, the Secretary may permit states to use federal Medicaid funds in ways that are not otherwise allowed. Each administration has some discretion over which waivers to approve and encourage (Table 1). While the Secretary’s waiver authority is broad, it is not unlimited. Section 1115 waivers have been challenged in court. The Secretary does not have authority to waive some elements of the program, such as the federal matching payment system for states, or requirements that are rooted in the Constitution, such as the right to a fair hearing.² 

Waiver Scope/Use. Waivers have been used to expand coverage or benefits, change policies for existing Medicaid populations (e.g., testing premiums or other eligibility requirements), modify delivery systems, restructure financing or authorize new payments (e.g., supplemental payments or incentive-based payments), as well as make other program changes. Waivers vary in size and scope. States can obtain “comprehensive” Section 1115 waivers that make broad program changes or narrow waivers focused on a specific population. Some policies introduced through 1115 waivers can only be implemented through Section 1115 authority while others could be implemented under other authorities (e.g., State Plan authority or 1915(c)). MACPAC analysis found about half of all Medicaid spending (in FY 2019) was authorized under Section 1115 demonstrations, but most of that spending could have been covered without an 1115 waiver. States may seek to include some populations or services in Section 1115 waivers that could be covered under other authorities to capture “budget neutrality” savings (discussed in more detail below). For example, although states can implement mandatory managed care for most populations under other authorities (e.g., State Plan or 1915(b)), states may implement managed care under 1115 authority to show budget neutrality savings, which can be used to finance other waiver costs that are not otherwise covered / allowed by Medicaid. In addition, many states have comprehensive waivers that make broad and intertwined program changes and may include both provisions that require 1115 authority as well as provisions that could be implemented without a waiver.

What are the rules about waiver financing?

Financing. Under long-standing policy and practice (although not required by statute), waivers must be “budget neutral” to the federal government over the course of the waiver. In other words, federal costs under an 1115 waiver may not exceed what they would have been for that state without the waiver. Typically, budget neutrality calculations are determined on a per enrollee basis—so, per enrollee spending over the course of the waiver cannot exceed the projected per enrollee spending calculated in the “without-waiver baseline” (putting states at risk for the costs per individual but not for the number of individuals enrolled). Waiver budget neutrality—measured against the estimated without-waiver baseline over the entire demonstration period—is not the same as a federal per enrollee limit on spending set at rates lower than expected under current law to generate federal savings. Budget neutrality calculations and the use of “budget neutrality savings” (to fund the federal share of costs not otherwise allowed) are negotiated between states and CMS (and the Office of Management and Budget (OMB)).

Because Section 1115 budget neutrality is not defined in statute or regulations, CMS agency policy and guidance to states has changed over time. For example, the Trump administration made changes to 1115 waiver budget neutrality policy in 2018, limiting the amount of federal funds that could be used for waiver spending. Later, the Biden administration made changes to Section 1115 budget neutrality policies that could provide greater flexibility for states to design and implement 1115 demonstration programs, including health-related social needs initiatives.

What are waiver timelines and processes?

Waiver Timeframe. Section 1115 waivers generally are approved for an initial five-year period and can be renewed, typically for three-to-five-year periods. Some waivers have been continually renewed over many periods, allowing waiver operations to continue for many years. Under the Trump administration, in a departure from prior policy, CMS approved waiver extension requests for up to 10 years.

Incoming administrations may let waivers expire, choosing not to renew certain waiver provisions if they don’t align with the administration’s waiver priorities or if they determine the provisions do not promote the objectives of the Medicaid program. Additionally, outlined in waiver approval terms and conditions, CMS reserves the right to withdraw Section 1115 waiver or expenditure authorities at any time (including those already in operation under an active/approved waiver). The Biden administration withdrew Medicaid work requirement waivers in all states that had approvals, concluding that the provisions do not promote the objectives of the Medicaid program. States can appeal withdrawal decisions to the HHS Department Appeals Board and/or challenge recissions in court.

Transparency, Public Input, and Evaluation. The Affordable Care Act (ACA) made Section 1115 waivers subject to new rules about transparency, public input, and evaluation.³  Regulations require public notice and comment periods to occur at the state and federal levels before CMS approves new Section 1115 waivers and extensions of existing waivers. Although the final regulations on public notice do not require a state-level public comment period for amendments to existing/ongoing demonstrations, CMS has historically applied these regulations to amendments as well. The Trump administration did not enforce state-level public notice and comment procedures maintained by previous administrations for certain 1115 waiver requests, including waivers that proposed significant changes.

The ACA also implemented new evaluation requirements for Section 1115 waivers, including that states must have a publicly available, CMS-approved evaluation strategy. States have traditionally also been required to submit quarterly reports as well as an annual report to HHS that describes the changes occurring under the waiver and their impact on access, quality, and outcomes.

Waiver Application, Monitoring, and Evaluation Process. Medicaid policy changes, including through Section 1115 waivers, may require state legislative action or may be authorized at the direction of the governor. Once proposed policy changes have been formulated, a demonstration waiver proposal must be drafted. Key steps in the waiver process include (Figure 1):

• State public notice and comment.⁴  Prior to submitting an 1115 waiver application (or extension request) for official federal review, states must provide a 30-day public notice and comment period and must hold at least two public hearings, sharing sufficient detail about the proposed waiver to allow for meaningful public input. The state must share waiver proposal materials on its website. Federal rules also require tribal consultation (with federally recognized tribes) prior to application submission.
• Waiver application submission. State waiver applications must contain specific components including a comprehensive description of the demonstration, enrollment estimates (including for each category of beneficiaries impacted by the demonstration), a list of specific requested waiver and expenditure authorities, research hypotheses, and written documentation of the state’s compliance with public notice requirements, with a report of the issues raised and how the state considered those comments when developing the application.
• Federal public notice and comment.⁵  The federal government conducts a review for application completeness and sends the state a notice of receipt, indicating the start date of a 30-day federal comment period. CMS will publish the waiver application on its website and must make the comments received publicly available. Rules require CMS to review and consider all comments submitted by the deadline.
• Federal review and negotiation. CMS reviews the waiver application sometimes with the involvement of other HHS agencies and the Office of Management and Budget (which reviews the budget neutrality component). Significant negotiation may occur between the state and HHS.
• Approval. If a waiver is approved, CMS issues an award letter to the state (also published on Medicaid.gov), listing the specific sections of the Social Security Act and applicable regulations that are being waived or modified and the types of expenditures allowed as well as the “terms and conditions” of approval, including a budget neutrality agreement. There has been significant variation in the length of time it takes to get final approval of a waiver. NAMD has noted the typical negotiation / approval timeframe ranges from 6 months to 2 years.
• Implementation plans and protocols. For some waiver initiatives, CMS may require states to submit detailed implementation plans or protocol documents for review and approval.
• Monitoring & Evaluation.^6 ,7  Because Section 1115 authority is intended for research and demonstration purposes, states must have an approved evaluation strategy in place that is publicly available. States are required to submit an interim evaluation report (one year before a waiver’s expiration or with a renewal application) and a summative evaluation (due 18 months after a waiver period ends). States have traditionally also been required to submit quarterly reports as well as an annual report to HHS that describes the changes occurring under the waiver and their impact on access, quality, and outcomes. States must also hold public forums to solicit feedback following waiver approval / implementation.
• Amendments & Renewals. States may submit “amendment” requests to CMS to alter existing / ongoing 1115 demonstrations. To ensure public transparency, CMS has historically required states to follow public notice and comment rules (even though final regulations left open the applicability of public notice requirements to proposed amendments). Extension / waiver renewal requests must contain specific components enumerated by CMS, including evaluation results.

*State waiver applications (including amendment and renewal requests), CMS issued approval documents, required implementation plans and protocols, and monitoring and evaluation reports are made publicly available on Medicaid.gov (search by state).

1. 42 U.S.C. § 1315. ↩︎
2. The Secretary’s waiver authority is limited to the provisions of 42 U.S.C. § 1396a, provided that waivers are demonstration projects that further Medicaid program objectives. 42 U.S.C. § 1315. ↩︎
3. [3] §10201(i) of P.L. 111-148 added a new subsection (d) to Section 1115 of the Social Security Act. CMS issued final regulations implementing these provisions of the ACA (42 CFR Part 431 where a new Subpart G is added). ↩︎
4. § 431.408 ↩︎
5. §431.416 ↩︎
6. §431.424 ↩︎
7. §431.428 ↩︎

This brief was updated in January 2025 to reflect details about the 15 drugs selected for the second year of the Medicare drug price negotiation program.

The Inflation Reduction Act of 2022 (the Act), signed into law by President Biden in August 2022, includes several provisions to lower prescription drug costs for people with Medicare and reduce drug spending by the federal government. One of the Act’s key drug-related provisions is a requirement for the Secretary of Health and Human Services (HHS) to negotiate prices with drug companies for certain drugs covered under Medicare Part D (starting in 2026) and Part B (starting in 2028). This requirement is the culmination of years of debate among lawmakers over whether to grant the federal government the authority to negotiate drug prices in Medicare, and is being implemented at the same time that several lawsuits have been filed seeking to thwart this effort.

On January 17, 2025, the Centers for Medicare & Medicaid Services (CMS) announced the list of 15 Part D drugs selected for the second round of price negotiation, after concluding the first round of negotiation for 10 Part D drugs in August 2024. These 15 drugs include the popular diabetes and obesity drugs Ozempic and Wegovy, along with other drugs used to treat asthma and chronic obstructive pulmonary disease, type 2 diabetes, different types of cancer, and other medical conditions (see Table 1 below). Negotiated prices for these drugs will take effect on January 1, 2027.

Drawing on CMS’s guidance for the second year of the Medicare drug price negotiation program, issued by the Biden Administration in October 2024, and the Act’s statutory language, these FAQs address several questions related to the negotiation program and CMS’s plans for implementation, with a focus on the details that apply for 2027. (For the next cycle of negotiation that will include both Part D and Part B drugs selected for 2028, CMS under the Trump administration would need to issue updated guidance.)

• How many and which types of drugs qualified for price negotiation for 2027?
• How did CMS identify the drugs selected for price negotiation for 2027?
• What is the timeline for key activities under the Medicare drug price negotiation program for 2027?
• How will CMS determine if a generic or biosimilar is available and being marketed?
• What is the Small Biotech Exception?
• What is the Biosimilar Delay?
• What factors does CMS use in negotiating the maximum fair price for a given selected drug?
• Who is eligible to receive the maximum fair price?
• Is there a ceiling on the maximum fair price? Does it vary depending on the type of drug?
• How will CMS determine its initial offer for the maximum fair price for a selected drug?
• What are the steps in the negotiation process between CMS and manufacturers of selected drugs?
• What happens if a generic or biosimilar drug becomes available after a drug has been selected for negotiation?
• Are there limitations on administrative or judicial review of various features of the drug price negotiation program?
• How will people with Medicare benefit from the drug price negotiation program?
• What was the outcome of the first round of negotiation for 2026?
• What is public opinion related to the drug price negotiation program?
• What is the status of lawsuits challenging the drug price negotiation program?

In general, implementation of the program for the second round of negotiation will be largely similar to the first round, but with additional opportunities for public input through more patient-focused roundtable discussions and more opportunities for the exchange of offer prices between CMS and manufacturers during the negotiation process. In its updated guidance, CMS also provided substantially more details about the “Medicare Transaction Facilitator” that will enable manufacturers to pass through the maximum fair price to dispensers of selected drugs for eligible individuals. While it is unclear what direction the Trump administration might take with respect to the negotiation program, it is possible that the approach to implementation in 2025 and beyond may differ from that which was laid out in CMS’s most recent guidance.

How many and which types of drugs qualified for price negotiation for 2027?

For 2027, 15 Medicare Part D drugs have been selected for price negotiation (Table 1). These 15 drugs include the popular diabetes and obesity drugs Ozempic and Wegovy, along with other drugs used to treat asthma and chronic obstructive pulmonary disease, type 2 diabetes, prostate and breast cancer, and other conditions. Total spending on these 15 drugs between November 2023 and October 2024 was $40.7 billion, with 5.3 million Medicare beneficiaries using these medications during that time.

Drugs qualified for price negotiation for 2027 if they are covered under Medicare Part D, Medicare’s outpatient prescription drug benefit program, and are single source brand-name drugs or biological products without therapeutically-equivalent generic or biosimilar alternatives that are approved or licensed and marketed on a “bona fide” basis (see below). In addition, a drug product must be at least 7 years (for small-molecule drugs) or 11 years (for biologics) past its FDA approval or licensure date, as of the date that the list of drugs selected for negotiation is published. This means that for a single source drug to be eligible for negotiation for 2027, a drug product must have been approved on or before February 1, 2018, and a biological product must have been licensed on or before February 1, 2014. For drugs with multiple FDA approvals, CMS uses the earliest approval date to determine the number of years that have elapsed.

The definition of ‘qualifying single source drug’ excludes certain types of drugs: (1) drugs that are designated for only one rare disease or condition and approved for an indication (or indications) only for that disease or condition (known as the orphan drug exclusion); (2) drugs with total spending under Part D and Part B combined of less than $200 million, increased by the percentage increase in the consumer price index for all urban consumers (CPI-U) between June 1, 2023 to September 30, 2024 (based on drug spending data from November 1, 2023 to October 31, 2024 for the 2027 determination); and (3) plasma-derived products. For 2026 to 2028, the Act also makes an exception for so-called “small biotech” drugs (explained in more detail below).

According to CMS, a drug that is designated for more than one rare disease or condition will not qualify for the orphan drug exclusion, even if it is not approved for any indications for those additional diseases or conditions. CMS will only consider active designations and approvals when making determinations about whether a drug qualifies for the orphan drug exclusion.

For 2028, up to 15 drugs covered under Medicare Part D or Part B will be selected for price negotiation, followed by up to 20 additional drugs covered under Part D or Part B drugs for 2029 and later years. The number of drugs with negotiated prices available will accumulate over time.

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How did CMS identify the drugs selected for price negotiation for 2027?

The 15 Part D drugs that were selected for price negotiation for 2027 were chosen from the top 50 negotiation-eligible Part D drugs with the highest total Medicare Part D expenditures. For this purpose, total expenditures are defined as total gross covered prescription drug costs. To determine this ranking, CMS first identified the qualifying single source drugs among all covered Part D drugs, applying the relevant statutory exclusions (as described above). CMS then calculated total expenditures for each qualifying drug, based on spending data for the 12-month period from November 1, 2023 to October 31, 2024. The top 50 drugs with the highest total expenditures for this 12-month period were the negotiation-eligible drugs for 2027.

The Inflation Reduction Act provides for a delay in selecting drugs for negotiation if they are biological products where there is a “high likelihood” of biosimilar market entry within two years of the publication date of the selected drug list (see details below). CMS announced that for 2027, when selecting the 15 highest-ranked Part D drugs from this top 50 list, no products qualified for delayed selection based on a high likelihood of biosimilar market entry before February 1, 2027.

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What is the timeline for key activities under the Medicare drug price negotiation program for 2027?

For the 15 Part D selected drugs with negotiated prices taking effect in 2027, Figure 1 provides a timeline of key dates and activities in the negotiation timeline.

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How will CMS determine if a generic or biosimilar is available and being marketed?

The availability and “bona fide” marketing of a generic or biosimilar for any strength or dosage form of a drug product will eliminate that drug from consideration as a qualifying single source drug. In determining whether a potential qualifying single source drug may be disqualified based on the availability and bona fide marketing of a generic or biosimilar, CMS intends to draw on information from multiple sources.

CMS will use FDA reference sources to determine whether a generic or biosimilar has been approved. In determining whether generic or biosimilar equivalents were available and marketed on a bona fide basis for the potential qualifying single source drugs for 2027, CMS reviewed Part D claims data from the period of January 16, 2024 to January 15, 2025, and Average Manufacturer Price (AMP) data for December 1, 2023 to November 30, 2024 to assess utilization and sales of generics or biosimilars.

According to CMS guidance, the determination of marketing on a bona fide basis will not be based on a strict quantitative definition but on the “totality of circumstances,” which, in addition to utilization and sales data, could also include factors such as whether the generic or biosimilar is readily available for purchase and whether any agreements exist between manufacturers of the brand and generic drug that might limit availability of the drug. CMS will conduct ongoing assessments to determine whether “meaningful” competition exists and ensure marketing on a bona fide basis.

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What is the Small Biotech Exception?

For 2026 through 2028, the Inflation Reduction Act specifies that “small biotech” drugs will not be eligible for negotiation. To qualify under this “Small Biotech Exception” for 2027, total expenditures under Part D on the drug in 2021 must be both 1% or less of total Part D expenditures for all covered Part D drugs, and 80% or more of total expenditures under Part D for all of the manufacturer’s drugs where a Coverage Gap Discount Program agreement was in effect in 2021. These calculations are made by CMS.

A manufacturer that seeks to have a drug considered for the Small Biotech Exception is required to submit information about the company and its products to CMS. For 2027, exception requests were due by December 10, 2024, and CMS determined that four drugs qualified for the Small Biotech Exception for the second round of negotiation.

Manufacturers who want to have a drug considered for this exception for 2028 will have to resubmit their request in the future, since CMS’s determinations about the Small Biotech Exception for 2026 and 2027 will not carry over to future years.

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What is the Biosimilar Delay?

The Inflation Reduction Act provides for a delay in selecting drugs for negotiation if they are biological products where there is a “high likelihood” of biosimilar market entry within two years of the publication date of the selected drug list. For 2027, this means that licensure and marketing of a biosimilar must be highly likely to occur before February 1, 2027. The rationale for this delay is to not create financial incentives that could deter biosimilars from entering the market if, for example, a reference product (the original biological product approved by FDA against which a proposed biosimilar product is compared) is selected for negotiation and ultimately priced lower than potential competitor biosimilar products.

For CMS to consider whether to grant such a delay, the manufacturer of the biosimilar biological product for a given negotiation-eligible reference product will need to submit a delay request to CMS prior to the selected drug publication date. The biosimilar manufacturer must not be the same as the manufacturer of the reference product, and there must be no agreements between the two manufacturers that restrict the availability of the biosimilar in the U.S. A biosimilar manufacturer will not know if the reference product will be selected for negotiation when they submit this request, but CMS will disregard the request if the reference product does not end up being selected for negotiation. For 2027, the deadline for submissions from biosimilar manufacturers for delay requests, including the documentation required to support CMS’s consideration of the request, was December 10, 2024.

CMS will make a determination of whether there is a high likelihood of biosimilar market entry based on two factors: (1) whether an application for licensure of the biosimilar product has been accepted for review or already approved by the FDA (no later than January 15, 2025 for the 2027 negotiation year), and (2) “clear and convincing” evidence that the manufacturer will engage in bona fide marketing of the biosimilar product within two years of the selected drug publication date (by February 1, 2027 for the 2027 negotiation year), including demonstrating that there are no patent barriers to entry and operational readiness to bring the biosimilar product to market. CMS will not grant a request to delay selection of a reference product for negotiation if more than one year has passed between licensure of the biosimilar and its marketing.  CMS announced that for 2027, none of the 15 selected drugs qualified for delayed selection based on a high likelihood of biosimilar market entry.

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What factors does CMS use in negotiating the maximum fair price for a given selected drug?

The Inflation Reduction Act requires CMS to consider certain manufacturer-specific factors and information about therapeutic alternatives to selected drugs in negotiating the “maximum fair price” for selected drugs, although the Act does not specify how CMS should weigh these different elements in the process of developing its offer for the maximum fair price.

The manufacturer-specific factors related to selected drugs include:

• The manufacturer’s research and development costs and the extent to which the manufacturer has recouped these costs.
• The current unit costs of production and distribution.
• Federal financial support for novel therapeutic discovery and development related to the drug.
• Data on pending and approved patent applications, exclusivities, and certain other applications and approvals.
• Market data and revenue and sales volume data in the U.S.

For the manufacturers of the 15 Part D selected drugs for 2027, these data elements are required to be reported to CMS by March 1, 2025.

Information about therapeutic alternatives includes:

• The extent to which the selected drug represents a therapeutic advance compared to existing therapeutic alternatives and the costs of these alternatives.
• Prescribing information for the selected drug and its therapeutic alternatives, which may include generics or biosimilars.
• Comparative effectiveness of the selected drug and its therapeutic alternatives, taking into account their effects on specific populations, such as individuals with disabilities, the elderly, the terminally ill, children, and other patient populations.
• The extent to which the selected drug and its therapeutic alternatives address unmet needs for a condition that is not adequately addressed by available therapy.

According to CMS guidance, information on these factors may be submitted by several entities, including the manufacturer of the selected drug, other drug manufacturers, people with Medicare, academic experts, clinicians, and others. Submissions are due by March 1, 2025 for the selected drugs for 2027. In addition to evaluating the information in these submissions, CMS will review the literature and real-world evidence, conduct internal analysis, and consult with experts regarding evidence of the clinical benefits of the selected drugs and their therapeutic alternatives.

The Act explicitly directs that the HHS Secretary “shall not use evidence from comparative clinical effectiveness research in a manner that treats extending the life of an elderly, disabled, or terminally ill individual as of lower value than extending the life of an individual who is younger, non-disabled, or not terminally ill.” In other words, the use of health outcomes evidence based on quality-adjusted life years (QALYs) in the process of negotiating a maximum fair price is not permitted.

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Who is eligible to receive the maximum fair price?

For selected drugs covered under Part D that are dispensed directly to individuals by a retail or mail order pharmacy, Medicare beneficiaries who are enrolled in Part D stand-alone drug prescription plans or Medicare Advantage plans offering drug coverage are eligible to receive the maximum fair price. For selected drugs covered under Part B that are administered to individuals in provider settings, Medicare beneficiaries enrolled in Part B, including those in both traditional Medicare and Medicare Advantage plans, are eligible to receive the maximum fair price. (Part B drugs will not be selected for negotiation until 2028.)

According to CMS guidance, the maximum fair price for a Part D selected drug must be provided to an enrollee when they use their Part D coverage to obtain that drug, but not when other coverage or payment arrangements are used, including plans that receive the Retiree Drug Subsidy, discount cards, or cash purchases.

CMS will require manufacturers to either ensure in advance that dispensing entities pay no more than the maximum fair price when they obtain the selected drug or reimburse dispensing entities for the difference between the acquisition price and the lower maximum fair price. A key requirement is that manufacturers adhere to a 14-day prompt payment window to facilitate timely payment of refunds to dispensing entities. CMS will engage a “Medicare Transaction Facilitator” (MTF) to help with the exchange of claims data and other information between different entities in the prescription drug supply chain to enable manufacturers to pass through the maximum fair price to dispensers of selected drugs for eligible individuals. CMS has established detailed guidelines for manufacturers of selected drugs and dispensing entities to participate in the MTF data exchange process, as well as guidelines for manufacturers who choose to use the MTF to pass through payments to dispensing entities.

CMS will require manufacturers of selected drugs to submit a plan for making the maximum fair price available in writing at least four months before the prices take effect (e.g., for the 2027 negotiation year, written plans are due no later than September 1, 2026). The plan shall include a description of how manufacturers will communicate with dispensing entities and, if the manufacturer chooses not to use the MTF for payment and reimbursement of dispensing entities, a description of the proposed alternative reimbursement mechanism. The Act establishes that manufacturers that do not ensure access to the maximum fair price for selected drugs to eligible individuals and dispensers may be subject to civil monetary penalties.

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Is there a ceiling on the maximum fair price? Does it vary depending on the type of drug?

The Inflation Reduction Act establishes an upper limit for the maximum fair price for a given drug. The upper limit is the lower of the drug’s enrollment-weighted negotiated price (net of all price concessions, including rebates) for a Part D drug, the average sales price for a Part B drug (which is the average price to all non-federal purchasers in the U.S., inclusive of rebates, other than rebates paid under the Medicaid program), or a percentage of a drug’s average non-federal average manufacturer price (non-FAMP) (which is the average price wholesalers pay manufacturers for drugs distributed to non-federal purchasers). This percentage of non-FAMP varies depending on the number of years that have elapsed since FDA approval or licensure: 75% for small-molecule drugs and vaccines more than 9 years but less than 12 years beyond approval; 65% for drugs between 12 and 16 years beyond approval or licensure; and 40% for drugs more than 16 years beyond approval or licensure. This approach means that the longer a drug has been on the market, the lower the ceiling on the maximum fair price.

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How will CMS determine its initial offer for the maximum fair price for a selected drug?

To determine its initial offer for a maximum fair price for a selected drug, CMS will: (1) identify therapeutic alternative(s) for the selected drug; (2) determine pricing information about the therapeutic alternatives to determine the starting point for the initial offer; (3) adjust the initial offer based on information about the clinical benefit of the selected drug compared to its therapeutic alternatives; and (4) make further adjustments to the offer price as needed based on manufacturer-specific data to determine the initial offer price.

According to the guidance, CMS will use the price of therapeutic alternative(s) as the starting point for determining the initial offer for the maximum fair price for a given selected drug. Specifically, for the 2027 negotiation year, CMS will use the lower of: the net Part D plan payment and beneficiary liability, which excludes both rebates as well as payments made by manufacturers in the coverage gap discount program, or the maximum fair price negotiated for 2026 selected drugs if any are therapeutic alternatives for 2027 selected drugs. If there is more than one therapeutic alternative for a selected drug, CMS will determine the starting point within the range of prices (whether net plan payment and beneficiary liability or maximum fair prices for those products).

For selected drugs with no therapeutic alternative or where the price of the alternative(s) is above the ceiling price, CMS will use the Federal Supply Schedule (FSS) or “Big Four Agency” price as the starting point, whichever is lower. (Drug prices listed on the FSS, which establishes prices available to all direct federal purchasers, are determined through both statutory rules and negotiation. A statutory cap on drug prices for the Big Four agencies—the Department of Veterans Affairs, the Department of Defense, the Public Health Service, and the Coast Guard—means the prices they pay are generally lower than prices paid by other direct federal purchasers.) If the FSS or Big Four prices are above the statutory ceiling, CMS will use the statutory ceiling as the starting point for its initial offer.

CMS will adjust the starting point for the initial offer based on a broad evaluation of evidence, including that which is submitted by manufacturers and the public, about the clinical benefit the selected drug provides relative to its therapeutic alternatives, including information about potential safety concerns and side effects, whether the selected drug represents a therapeutic advance as measured by improvements in clinical outcomes, and information about the effects of the selected drug and its therapeutic alternatives on specific populations, including people with disabilities and older adults. CMS will also consider comparative effectiveness data on patient-centered outcomes and patient experiences.

If a selected drug has no therapeutic alternatives, CMS will evaluate evidence about the drug’s clinical benefit, including outcomes and effect on specific populations, and also will consider the extent to which the selected drug fills an unmet medical need, meaning the drug treats a disease or condition where there are very limited or no other treatment options, or the existing treatments do not adequately address the disease or condition. This consideration will be made separately for each indication of a selected drug, where applicable.

After considering information about clinical benefit, CMS will adjust its starting point for the initial offer price to arrive at a “preliminary price.” After determining the preliminary price, CMS will take into account manufacturer-specific data elements. These data, and their illustrative effect on the preliminary price as described in the revised guidance, are:

• Research and development (R&D) costs: if a manufacturer has recouped its R&D costs, CMS could adjust the preliminary price downward, or upward if such costs have not been recouped.
• Current unit costs of production and distribution: if lower than the preliminary price, CMS could adjust the price downward, or upward if such costs are higher than the preliminary price.
• Prior federal financial support: if discovery and development of the selected drug was supported by federal funding, CMS could adjust the preliminary price downward.
• Patent information: this data will support CMS’s evaluation of whether a selected drug represents a therapeutic advance or meets an unmet medical need, particularly in light of any exclusivities which mean that a selected drug is the only available therapy.
• Market data and revenue and sales volume data for the drug in the U.S.: depending on how CMS’s preliminary price compares to other market pricing data for the selected drug, CMS could, for example, revise downward the preliminary price if the average commercial net price is lower, or upward if the average commercial net price is higher.

After making any necessary adjustments to the preliminary price based on a review of manufacturer-specific data, CMS will arrive at its initial offer for the maximum fair price.

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What are the steps in the negotiation process between CMS and manufacturers of selected drugs?

CMS’s guidance outlines several steps in the negotiation process (Figure 1). These steps, and the relevant dates for selected drugs for 2027, are:

• CMS and manufacturers of selected drugs enter into a written agreement to negotiate to determine the maximum fair price for selected drugs by February 28, 2025.
• Submission of economic and market data from manufacturers of selected drugs to CMS and information about therapeutic alternatives is due on March 1, 2025.
• CMS will host one meeting with manufacturers of selected drugs in Spring 2025 after the submission of manufacturer-specific data elements so that manufacturers can provide additional context for their data submission and share new information, if applicable.
• CMS will host up to 15 patient-focused roundtable events with consumer and patient organizations (with selected drugs aggregated by condition, as appropriate) and one clinician-focused town hall event in Spring 2025 to solicit patient-focused and clinical information on therapeutic alternatives and other information for CMS to consider in developing its initial offer for selected drugs.
• CMS will make a written offer to the manufacturer of a selected drug with its initial offer of the maximum fair price by June 1, 2025. This written offer will include a justification for CMS’s initial offer based on the methodology used, including how CMS evaluated various data submitted by manufacturers and evidence about alternative therapies.
• An optional negotiation meeting between CMS and manufacturers of selected drugs could take place between the date of CMS’s initial offer and the deadline for manufacturers to respond.
• Manufacturers respond to CMS’s initial offer in writing either accepting the offer or making a counteroffer within 30 days of receiving the initial offer (e.g., July 1, 2025, for initial offers made by CMS on June 1, 2025). The written counteroffer should include the manufacturer’s proposed maximum fair price, along with a justification for that amount and a response to CMS’s justification for its initial offer. If the manufacturer does not accept CMS’s initial offer, a written counteroffer must be submitted, If the manufacturer accepts CMS’s initial offer, the negotiation process ends.
• CMS will provide a written response to the manufacturer in response to an optional written counteroffer, either accepting or rejecting the counteroffer, within 30 days (e.g., July 31, 2025, if the manufacturer’s counteroffer is made on July 1, 2025). If CMS accepts the manufacturer’s counteroffer, the negotiation process ends.
• If CMS rejects the manufacturer’s counteroffer, up to 2 additional in-person or virtual meetings could occur between CMS and the manufacturer to discuss offers and counteroffers. The meetings would focus on manufacturer-submitted data and information about therapeutic alternatives, and how that information should factor into the maximum fair price. The timeframe for negotiation meetings would end no later than September 30, 2025. Additional written offers and counteroffers could be exchanged after CMS’s rejection of the manufacturer’s counteroffer and final agreement on the maximum fair price (up to one week prior to CMS submitting a final written offer).
• After any negotiation meetings between CMS and the manufacturer, CMS makes a final written offer for the maximum fair price (no later than October 15, 2025 for the 2027 negotiation cycle).
• Manufacturers consider CMS’s final offer and either accept or reject the offer in writing (by October 31, 2025 for the 2027 negotiation cycle).
• The negotiation process ends when CMS and manufacturers of selected drugs reach agreement on the maximum fair price, but no later than the statutorily defined deadline for the negotiation process (November 1, 2025 for the 2027 negotiation cycle).

If an agreement on the maximum fair price is not reached by the deadline for the negotiation process, manufacturers may be subject to an excise tax, which is being administered by the IRS, as specified in the Inflation Reduction Act. CMS has outlined an expedited process manufacturers can follow if they choose to not participate in the negotiation program, which would enable them to withdraw their drugs from coverage under Medicare and Medicaid to avoid paying the excise tax.

According to CMS, manufacturers may disclose information related to the negotiation process with CMS if they choose to do so. CMS will not publicly discuss the specifics of the negotiation process related to any manufacturer but reserves the right to do so if manufacturers themselves choose to disclose this information.

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What happens if a generic or biosimilar drug becomes available after a drug has been selected for negotiation?

Drugs are not eligible to be selected for negotiation if there is a generic or biosimilar using that drug as the reference product approved or licensed by the FDA and being marketed. (Authorized generics do not count for this purpose, since they are not technically generic drugs as that term is commonly used, but rather the same drug product as the brand-name drug with a different label.) If a drug has already been selected for negotiation and CMS determines that a generic or biosimilar drug has been approved or licensed and is being “bona fide” marketed (as described above) – either before or during the negotiation process – the negotiation process will not start or will be suspended. The drug will continue to be a selected drug (not replaced by another drug), but no maximum fair price will be negotiated. To be removed from the list of selected drugs for 2027, CMS will need to make this determination between February 1, 2025 and November 1, 2025 (between the selected drug publication date and the end of the negotiation process.)

If CMS determines that a generic or biosimilar drug has been approved and marketed after a drug has been selected for negotiation and after a maximum fair price has been established, the maximum fair price will take effect, but depending on when the determination is made, that drug will no longer be a selected drug and the maximum fair price will not apply in subsequent years. For selected drugs for 2027, if the determination of generic drug availability is made between November 2, 2025 and March 31, 2027, the maximum fair price will only apply in 2027 and the drug will no longer be a selected drug for 2028; if the determination is made between April 1, 2027 and March 31, 2028, the maximum fair price will apply in 2027 and 2028 and the drug will no longer be a selected drug for 2029.

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Are there limitations on administrative or judicial review of various features of the drug price negotiation program?

The Act specifies several features of the drug price negotiation program that are not subject to administrative and judicial review, including:

• The determination of whether a drug is a qualifying single source drug
• The determination of whether a drug is a negotiation-eligible drug
• The selection of drugs for negotiation
• The determination of the maximum fair price for a selected drug
• The determination of whether a drug is subject to renegotiation
• The determination of units of a drug or biological product for the purposes (where unit is defined as the lowest amount of the product that is dispensed)
• The determination of whether a drug qualifies for the biosimilar delay

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How will people with Medicare benefit from the drug price negotiation program?

There is uncertainty about how many Medicare beneficiaries will see lower out-of-pocket drug costs in any given year under the drug price negotiation program and the magnitude of potential savings, since both will depend on which drugs are subject to the negotiation process and the price reductions achieved through the negotiation process relative to what prices would otherwise be. For the 15 drugs selected for the second round of price negotiation, a total of 5.3 million Medicare beneficiaries used these medications between November 2023 and October 2024, ranging from a high of 2.2 million who used Ozempic, Wegovy, and Rybelsus down to 14,000 for the anti-cancer drug Pomalyst.

In addition, whether Part D enrollees pay lower out-of-pocket costs for a given Part D selected drug will depend in part on whether they pay flat copayment amounts or a coinsurance rate for the drug in their chosen Part D plan. If they pay coinsurance, they could see savings, assuming the negotiated maximum fair price is lower than their plan’s negotiated price.

Aside from the potential for out-of-pocket cost savings, the drug price negotiation program could improve Medicare Part D enrollees’ access to Part D drugs that are selected for negotiation, since Part D plans are required to cover all selected drugs with negotiated maximum fair prices, including all dosage forms and strengths. In the absence of this coverage requirement, it is possible that not all selected drugs, or all forms of the drugs, would be covered on all Part D plan formularies. Under current law, Part D plans generally can choose which drugs to cover and not cover on their formularies, subject to CMS’s formulary guidelines and requirements, except for drugs in six called “protected classes,” where all or substantially all drugs must be covered. CMS will use the annual formulary review process to ensure that all Part D plans cover all dosages and formulations of selected drugs. CMS will also review whether Part D plan sponsors place selected drugs on non-preferred tiers; place selected drugs on a higher tier than non-selected drugs in the same class; require utilization of an alternative brand prior to a selected drug; or impose more restrictive utilization management tools on a selected drug relative to a non-selected drug in the same class. In any such instances, CMS expects Part D plan sponsors to provide a clinical justification for these practices and will only approve those formularies that adhere to all statutory and regulatory guidelines and requirements.

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What was the outcome of the first round of price negotiation for 2026?

On August 15, 2024, CMS announced negotiated prices for the first 10 drugs that were selected for negotiation. The 10 drugs selected for the first round of negotiations include treatments for several medical conditions, including diabetes (Farxiga, Fiasp/NovoLog, Januvia, Jardiance), blood clots (Eliquis, Xarelto), heart failure (Entresto, Farxiga), psoriasis (Stelara, Enbrel), rheumatoid arthritis (Enbrel), Crohn’s disease (Stelara), and blood cancers (Imbruvica) (Table 2). These prices will take effect for Medicare beneficiaries on January 1, 2026.

According to CMS, Medicare would have saved $6 billion if the prices that CMS negotiated for these 10 drugs had been in effect in 2023, amounting to net savings of 22% on these medications. CMS has also estimated that Medicare beneficiaries will save $1.5 billion when these negotiated prices take effect in 2026.

CMS published written explanations of the negotiated prices for the first 10 selected Part D drugs in December 2024, explaining the factors that were considered in the negotiation process, including manufacturer-specific financial data about the selected drugs and evidence about the clinical benefits of selected drugs compared to alternative treatments.

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What is public opinion related to the drug price negotiation program?

According to KFF Health Tracking polls, most adults favor allowing the federal government to negotiate drug prices with manufacturers to get a lower price on prescription drugs, and more than half of the public (55% overall, including 65% of Democrats, 54% of Independents, and 48% of Republicans) thinks that expanding the number of drugs subject to negotiation should be a top priority for Congress and the Trump administration.

More than 8 in 10 adults (85%) also favor allowing the government to negotiate lower prices with drug companies that would apply to both Medicare and private insurance (Figure 2). Even after hearing arguments for and against drug price negotiation by the federal government, a majority of adults continue to favor this approach. At the same time, KFF polling also shows that most adults are unaware that the law now requires the federal government to negotiate the price of some prescription drugs for people with Medicare. Just over one-third of voters overall (35%), and close to 4 in 10 (38%) voters ages 65 and older, say they are aware of this provision of the Inflation Reduction Act.

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What is the status of lawsuits challenging the drug price negotiation program?

Since June 2023, several lawsuits have been filed challenging the drug price negotiation program by manufacturers of selected drugs and entities representing the pharmaceutical industry. These lawsuits – nine of which are ongoing, as of January 2025 – have raised similar constitutional and statutory challenges against the program. Among the constitutional challenges raised are the following:

• Drug manufacturers will be forced to give selected drugs to the government without fair compensation, in violation of the Fifth Amendment.
• Drug manufacturers are compelled to call this program a “negotiation” and say that final prices are “fair,” in violation of the corporations’ freedom of speech.
• The penalties levied on drug manufactures for not complying with the program and negotiation terms are so high they constitute “excessive fines,” which are banned by the Eight Amendment.

Other constitutional challenges include that the program violates the separation of powers doctrine and the Due Process Clause. In addition, plaintiffs are challenging the program on statutory grounds, such as the Administrative Procedures Act.

To date, none of these lawsuits have been decided in favor of industry plaintiffs. Most cases are either in the briefing stage or awaiting decisions before various U.S. appellate courts. In the event of conflicting rulings, an eventual hearing of one or more of these cases by the Supreme Court would be the likely outcome, but the timeframe for that is uncertain. It is not clear to what extent the federal government under the Trump administration will continue to defend the Medicare drug price negotiation program in court as these lawsuits move through the judicial system.

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At the start of 2025, many issues are at play that could affect Medicaid coverage, financing, and access to care. Medicaid is the primary program providing comprehensive health and long-term care to one in five people living in the U.S. While Medicaid was not discussed much on the campaign trail, there are expectations that big changes will likely be proposed through executive actions by the Trump administration and as part of a tax and spending debate in Congress. Even without Congressional action, the Trump administration can make significant programmatic changes through administrative action (including state demonstration waivers, regulations, and other guidance). Other areas to watch with Medicaid implications include state budgets and long-term care workforce challenges.

Federal Funding Cuts and Financing Reforms

The most significant changes to Medicaid in 2025 could include federal funding cuts and financing reforms. According to documents reported on by Politico, House Republicans are considering $2.3 trillion in Medicaid cuts from policy changes that include: imposing a per capita cap on federal Medicaid spending, reducing the federal government’s share of costs for the Affordable Care Act (ACA) expansion group, imposing Medicaid work requirements, reducing the minimum federal matching rate for Medicaid expenditures, changing the match rate for the District of Columbia, and repealing the incentive for states to newly adopt the Medicaid expansion that was passed in the American Rescue Plan Act. These policy changes would fundamentally alter how Medicaid financing works and federal spending reductions of this magnitude would put states at significant financial risk, likely forcing them to cut the number of people covered, cover fewer benefits, and cut payment rates for physicians, hospitals, and nursing homes. If the House and Senate pass a budget resolution with a $2.3 trillion target for Medicaid, Congress will need to come up with detailed legislative policy proposals to hit that target through the budget reconciliation process.

Under current law states are guaranteed federal matching dollars without a cap for qualified services provided to eligible enrollees. The match rate (the share that the federal government pays, known as the federal medical assistance percentage or “FMAP”) varies across states based on per capita income. States receive a higher match rate for some services and populations, most notably, the 90% enhanced match for the ACA expansion population, and sometimes, Congress adjusts the match rate upwards during economic downturns.

Work Requirements

With a second Trump administration and Republican control of Congress, work requirements are likely to be back on the agenda—through federal legislation or state Medicaid waivers. During the first Trump administration, 13 states received 1115 waiver approval to condition Medicaid coverage on meeting work and reporting requirements. Only Arkansas implemented work and reporting requirements with consequences for noncompliance; however, the waiver ended in 2019 when a federal court found the work requirement approval unlawful. 18,000 people lost coverage in Arkansas, primarily due to failure to regularly report the fact that they were working or document eligibility for an exemption. These approvals were either rescinded by the Biden administration or withdrawn by states, and Georgia is the only state with a work requirement waiver in place (following litigation over the Biden Administration’s attempt to stop it). Several states have continued to pursue work requirement waivers despite data showing that most Medicaid adults are working or face barriers to work. Among adults with Medicaid who are under age 65 and do not have Medicare or Supplemental Security Income (SSI), 91% are working, or are not working due to an illness, caregiving responsibilities, or school attendance. A Congressional Budget Office analysis of a recent work requirement proposal shows that the policy would reduce federal spending due to reductions in enrollment and increase the number of people without health insurance but would not increase employment.

Other Waivers and Administrative Changes

Beyond work requirements, the previous Trump administration’s Section 1115 waiver policy emphasized eligibility restrictions and capped financing. Eligibility restrictions included permitting states to charge premiums and lock out enrollees who are disenrolled for unpaid premiums. Waiver priorities shift across presidential administrations and the new Trump administration’s waiver priorities will likely differ significantly from those of the Biden administration; however, it is unclear how the Trump administration will treat certain waivers promoted and approved by the Biden administration, such as those focused on addressing health-related social needs, multi-year continuous eligibility primarily for children, and leveraging Medicaid to help individuals leaving incarceration transition to the community. The Trump administration could choose not to approve waivers that remain pending, rescind existing waiver guidance, and withdraw approved waivers, although some of these waivers, particularly those that are using Medicaid to assist with reentry from incarceration, have been pursued by both Republican and Democratic governors.

Trump administration could delay implementation of new regulations or issue new rules or guidance related to access, managed care, and enrollment processes. The Biden administration finalized a number of major Medicaid regulations designed to promote quality of care and advance access to care for Medicaid enrollees as well as to streamline eligibility and enrollment processes in Medicaid and the Children’s Health Insurance Program (CHIP). These rules are complex and are set to be implemented over several years. Congress may consider legislation to overturn these rules, without legislation, the Trump administration could delay implementation of certain provisions or could issue new regulations that would undo these final rules. (Rules related to long-term care are discussed below). Finally, the Trump administration could issue guidance and implement policy to make it more difficult for people to obtain and maintain coverage, which would reduce enrollment and spending. Previously, the Trump administration sought to reduce Medicaid enrollment by encouraging states to conduct eligibility verification processes in between annual renewal periods.

State Budget Constraints and Priorities

State fiscal conditions remained stable at the beginning of state FY 2025, but the longer term fiscal outlook is less certain. Heading into FY 2025, revenue collections had begun to stabilize and states were returning to more “normal” state budget environments, following multiple years of high revenue and spending growth as well as pandemic-related volatility and unpredictability. States appeared to be in a stable fiscal position, though there is variation across states. According to FY 2025 enacted budgets, most states anticipated revenue growth would continue to flatten and state general fund spending growth would slow. While states have made a number of Medicaid investments in recent years, including to expand access to behavioral health services, improve Medicaid reimbursement rates (particularly for long-term care), and to use Medicaid to help address social determinants of health, and reduce health disparities, expectations of reduced revenue collections beyond 2025 may dampen enthusiasm for further investments in Medicaid and could even prompt spending reductions. Reduced state revenues may be tied to implementation of state tax cuts, the expiration of pandemic-era federal funding, and other macroeconomic uncertainties Any reductions in federal Medicaid spending would put further pressure on state budgets and lead to program cuts.

The Long-Term Care Workforce

It is unknown whether new administrative actions will undermine efforts to bolster the long-term care workforce. There are also longstanding challenges finding enough workers to provide long-term care for people who need such services, and the COVID-19 pandemic exacerbated those issues considerably. As of February 2024, employment levels in most long-term care settings remained below pre-pandemic levels. The Biden Administration finalized two rules intended to address those challenges and increase access to services. The Administration finalized a rule that would create new staffing requirements in nursing facilities, require state Medicaid agencies to report on the percent of Medicaid payments for institutional long-term care that are spent on compensation for direct care workers and support staff, and provide funding for individuals to enter careers in nursing facilities. The rule will increase the number of staff in many nursing facilities, but also increase Medicaid spending. The Administration also finalized a rule aimed at ensuring access to Medicaid services, which included several provisions aimed specifically at home care, which is long-term care provided in home and community environments. The “access” rule requires states to spend least 80% of total payments for certain home care services on compensation for direct care workers. It’s unknown whether the Trump Administration will implement those rules or revise them, and it is possible Congress will overturn them.

Cuts to Medicaid and changes in immigration policy may exacerbate workforce challenges, reduce payment rates for long-term care workers, and erode supports to family caregivers. In response to workforce challenges, many states have adopted payment rate increases for nursing facilities and home care providers with the goal of boosting staffing levels. All states have also created supports for family caregivers, recognizing that caregiving can be very demanding, particularly when there are shortages of paid caregivers. Those initiatives may be impossible to sustain if federal support for Medicaid is reduced by one third. Beyond reducing Medicaid resources, President Trump’s planned crackdown on immigration may further strain the long-term care workforce, which relies heavily on foreign-born workers.

What to Watch

The issues identified in this policy watch could have major implications for Medicaid coverage, financing, and access to care. As these issues play out, the following key questions will be at the forefront:

• Federal funding cuts and financing reforms: Will Congress enact major cuts to federal Medicaid funding and changes to how the Medicaid program is financed? What will federal cuts in Medicaid mean for people enrolled in the program, states, and providers? How will the impact of any federal policy and funding changes vary across states?
• Work requirements: Will Congress pass legislation to allow or require work and reporting requirements in Medicaid? If Congress does not include work requirements in legislation, which states will pursue work and reporting requirement waivers under a second Trump administration? How will such policies affect coverage?
• Other waivers and administrative changes: Beyond work requirements, what waivers will be encouraged and approved under the second Trump administration? Will the administration withdraw any approved waivers or rescind Biden administration waiver guidance? What will happen with major access and eligibility / enrollment regulations finalized under the Biden administration? How will other administrative guidance affect coverage?
• State budget constraints and priorities: What are current projections for state revenue growth? How will changes in state fiscal conditions affect states’ ability to continue to pursue and maintain recent investments in Medicaid for behavioral health, long-term care, reimbursement rates, social determinants of health, and efforts to reduce disparities? How will federal Medicaid policy changes affect state budgets?
• The long-term care workforce: Will Congress or the new Trump administration overturn final rules that would bolster nursing facility staffing, wages for long-term care workers, and payment transparency? How will broader changes in Medicaid affect states’ ability to retain higher payment rates for long-term care workers and supports for family caregivers? How will changes in immigration policies affect the direct care workforce?