Claims Denials and Appeals in ACA Marketplace Plans in 2023

Authors: Justin Lo, Michelle Long, Rayna Wallace, Meghan Salaga, and Kaye Pestaina
Published: Jan 27, 2025

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.

HealthCare.gov Issuers Denied 19% Of In-Network Claims In 2023

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).

Denial Rates For In-Network Claims By HealthCare.gov Issuers, 2015-2023

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 For In-Network Claims By HealthCare.gov Issuers, 2023

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).

Average Denial Rates For In-Network Claims By HealthCare.gov Issuers, By State, 2023

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.)

Denial Rates By Parent Companies That Received More Than 5 Million Claims, 2023

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).

Plan-Level Denial Rates For In-Network Claims By HealthCare.gov Issuers, By Metal Level, 2023

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.

Reasons For In-Network Claims Denials Among HealthCare.gov Plans, 2023

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.

Connecticut Health Insurer Claims Denials And Reasons, 2023

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.

Methods and Data Limitations

Our analysis of the CMS Transparency in Coverage Public Use File includes insurers with more than 1,000 claims submitted and excludes stand-alone dental plans and small group (SHOP) plans. Of the 206 major medical insurers offering plans in 2025 in HealthCare.gov states, 175 reported receiving more than 1,000 claims and show data on claims received and denied. Among insurers participating in HealthCare.gov states in 2023, 43 are not participating in 2025 so they did not provide claims denial information. Calculation of claims denial rates includes information provided by insurers on plans offered in 2023 but not in 2025. A claim may be initially denied, then resubmitted and approved; claims that are paid even after initial denial do not count as denied in the claims denial rate calculation.

Twenty-nine insurers offering plans in 2025 did not offer plans in 2023. Just under half (45%) of plans available in 2025 were not available in 2023 among states that offered plans on HealthCare.gov in both years; of the 6,126 plans offered in 2023, only 2,481 (40%) were offered in 2025 and are included in the plan-level reporting providing information on denial reasons. Half of returning insurers did not provide statistics on denial reasons for more than 21% of claims filed in 2023, as they were associated with plans not being offered in 2025.

Calculation of denial reasons excluded claims that were denied as out-of-network in all totals. Since out-of-network denials may depend more on plan type than insurer processes, the analysis focused on in-network claims. Claims that are denied do not necessarily indicate that services are not ultimately paid by the insurer, such as when a new claim is filed instead of resubmitted.

The external appeal rate assumes that all external appeals went through an internal appeal first and was calculated as the number of external appeals filed over the number of internal appeals upheld. CMS suppresses reporting of values under 10. When calculating statistics with suppressed values, they were assumed to be zero. Additional considerations for using CMS transparency public files can be found here. To obtain the parent company name, the 2025 Qualified Health Plan landscape file was merged with the Medical Loss Ratio Submission Template header using HIOS plan identification numbers to find NAIC company codes. The NAIC identifier was then mapped to a parent company name using the Enrollment by Segment Exhibit data from Mark Farrah associates. A small number of insurers could not be mapped by this method and parent company names were entered manually. Statistics calculated at the parent company level do not include plans offered in segments other than on-exchange ACA plans offered in HealthCare.gov states.

Data from Covered California was compiled from reporting by insurer. Of the 11 insurers submitting data for the 2023 plan year, 8 submitted complete information and are included in our analysis. One insurer reported its plan-level claims data by benefit category (medical, pediatric vision and dental, and pharmacy) instead of by plan; from this data we calculated plan-level totals. We assume that other Covered CA insurers also included these four benefit categories when reporting their plan-level data as all four are considered Essential Health Benefits. Our analysis excludes stand-alone dental plans and small-group plans.

Medicaid Section 1115 Waivers: The Basics

Published: Jan 24, 2025

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.

History Of Medicaid Section 1115 Waivers

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 ↩︎

FAQs about the Inflation Reduction Act’s Medicare Drug Price Negotiation Program

Published: Jan 23, 2025

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.)

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.

Table of Contents

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

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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.

The 15 Drugs Selected for Medicare Price Negotiation for 2027 Include Drugs Covered by Medicare Part D to Treat Diabetes, Asthma, COPD, Prostate and Breast Cancer, and Other Conditions

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.

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

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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.

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

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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.

Timeline of Key Activities Under the Medicare Drug Price Negotiation Program For Initial Price Applicability Year 2027

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

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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.

What is the Small Biotech Exception?

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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.

What is the Biosimilar Delay?

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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.

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

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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.

Who is eligible to receive the maximum fair price?

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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.

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

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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.

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

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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.

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

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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?

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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.

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

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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

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

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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.

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

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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.

The 10 Medicare Part D Drugs Selected for Price Negotiation for 2026 Include Drugs Used to Treat Cancer, Diabetes, Blood Clots, Heart Failure, Psoriasis, and Rheumatoid Arthritis

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.

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

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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.

People Overwhelmingly Support Medicare Drug Price Negotiations, but Most Don’t Realize It’s Happening

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

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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.

This work was supported in part by Arnold Ventures. KFF maintains full editorial control over all of its policy analysis, polling, and journalism activities.

Medicaid: What to Watch in 2025

Published: Jan 23, 2025

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?

The U.S. Government and the World Health Organization

Published: Jan 21, 2025

This factsheet has been updated to reflect the Trump Administration’s Executive Order on Withdrawing the United States from the World Health Organization, issued on January 20, 2025.

Key Facts

  • The World Health Organization (WHO), founded in 1948, is a specialized agency of the United Nations with a broad mandate to act as a coordinating authority on international health issues, including helping countries mount responses to public health emergencies.
  • The U.S. government (U.S.) has been actively engaged with WHO throughout its history, providing financial and technical support as well as participating in its governance structure. However, on January 20, 2025, President Trump announced the U.S. would withdraw as a member of WHO and halt funding to the organization. In 2020, during the first Trump administration, the U.S. temporarily suspended funding and initiated a process to end membership, actions that were reversed by the Biden administration in 2021.
  • Historically, the U.S. has historically been one of the largest funders of WHO. U.S. contributions have ranged between $163 million and $816 million annually over the last decade.
  • Over the last several years WHO has overseen negotiation processes to update an existing agreement known as the International Health Regulations (IHR), and to establish a potential new “pandemic agreement”. In May 2024, member states approved a set of revisions to the IHR but decided to extend the negotiation timeline for a pandemic agreement into 2025. By executive order from President Trump the U.S. will no longer participate in pandemic agreement negotiations, and its future is uncertain.
  • In 2024, WHO launched its first ever “investment round,” seeking to mobilize an additional $7 billion from existing and new donors to support its operations through 2028. As of the end of 2024, the organization reported it received $3.8 billion in additional donor pledges, amounting to 53% of its fundraising goal. The Biden administration did not announce a pledge to WHO at that time and the Trump administration has already said that it will cease funding the organization.

What is the World Health Organization?

WHO, founded in 1948, is a specialized agency of the United Nations. As outlined in its constitution, WHO has a broad mandate to “act as the directing and coordinating authority on international health work” within the United Nations system. It has 194 member states.

The agency has played a key role in a number of past global health achievements, such as the Alma-Ata Declaration on primary health care (1978), the eradication of smallpox (formally recognized in 1980), the Framework Convention on Tobacco Control (adopted in 2003), and the 2005 revision of the International Health Regulations (IHR), an international agreement that outlines roles and responsibilities in preparing for and responding to international health emergencies.  WHO has regularly provided member states with technical guidance and support during responses to epidemics and pandemics, such as Ebola, Zika, mpox, and COVID-19.

Mission and Priorities

WHO’s overarching mission is “attainment by all peoples of the highest possible level of health.” It supports its mission through activities such as:

  • providing technical assistance to countries;
  • setting international health standards and providing guidance on health issues;
  • coordinating and supporting international responses to health emergencies such as disease outbreaks; and
  • promoting and advocating for better global health.

The organization also serves as a convener and host for international meetings and discussions on health issues. While WHO is generally not a direct funder of health services and programs in countries, it does provide supplies and other support during emergencies and carries out programs funded by donors.

WHO’s overarching objective for its current work period (2019-2025) has been “ensuring healthy lives and promoting well-being for all at all ages.” In pursuit of this objective, it has been focusing on three strategic priorities (the “triple-billion targets”): helping 1 billion more people benefit from universal health coverage; ensuring 1 billion more people are better protected against health emergencies; and helping 1 billion more people enjoy better health and well-being.

As part of its work to help countries be better protected against health emergencies – and propelled by the issues and challenges faced during the COVID-19 pandemic – WHO has been overseeing two sets of international negotiations among member states:

At the May 2024 World Health Assembly (WHA) meeting, member states did reach consensus and approved a set of revisions to the IHR. On the pandemic agreement, member states have not yet reached consensus and decided to continue negotiations into 2025 with a goal of completing negotiations and voting on the agreement at the May 2025 WHA meeting.

Organization

WHO has a global reach, with a headquarters office located in Geneva, Switzerland, six semi-autonomous regional offices that oversee activities in each region,1  and a network of country offices and representatives around the world. It is led by a Director-General (DG), currently Dr. Tedros Adhanom Ghebreyesus, who was first appointed in 2017 and was re-elected to a second five-year term in May 2022. Dr. Tedros has indicated that his priorities include continuing to strengthen WHO’s financing, staffing, and operations; building pandemic preparedness and response capacities at WHO and elsewhere; and helping countries re-orient health systems toward primary health care and universal health coverage.

World Health Assembly

The World Health Assembly (WHA), comprised of representatives from 194 member states, is the supreme decision-making body for WHO and is convened annually. It is responsible for selecting the Director-General, setting priorities, and approving WHO’s budget and activities. The annual WHA meeting in May also serves as a key forum for nations to debate and make decisions about health policy and WHO organizational issues. Every four years, the WHA negotiates and approves a work plan for WHO, known as the general programme of work (GPW). The current GPW, for 2019-2023, has been extended by the WHA through 2025. Every two years the WHA also approves WHO’s programme budget in support of its work plan; the current programme budget covers the 2024-2025 biennium. More information about WHO’s budget provided below.

Executive Board

WHO’s Executive Board, comprised of 34 members technically qualified in the field of health, facilitates the implementation of the agency’s work plan and provides proposals and recommendations to the Director-General and the WHA. The 34 members are drawn from six regions as follows:

  • 7 represent Africa,
  • 6 represent the Americas,
  • 5 represent the Eastern Mediterranean,
  • 8 represent Europe,
  • 3 represent South-East Asia, and
  • 5 represent the Western Pacific.

Member states within each region designate members to serve on the Executive Board on a rotating basis. The U.S. currently holds a seat on the Executive Board.

Activities

WHO supports activities across a number of key areas, organized into several “budget segments,” including “base programmes,” emergency operations, polio eradication, and “special programmes” (see Table 1). “Base programmes” refers to the core support provided for WHO headquarters activities, regional operations, and efforts such as improving access to quality essential health services, essential medicines, vaccines, diagnostics, and devices for primary health care. “Emergency operations” includes WHO efforts to help countries prepare for and respond to epidemics and other health emergencies such as COVID-19, mpox, and natural disasters. “Special programmes” includes a number of WHO-led initiatives such as the Research and Training in Tropical Diseases program and Pandemic Influenza Preparedness (PIP) Framework activities.

Funding

Programme Budget

WHO has a programme budget set in advance by member states, which is meant to outline planned activities to meet its work plan over a two-year period (biennium) and describes the “resource levels required to deliver that work.” The current programme budget of $6.834 billion covers the period 2024-2025, and was approved by member states in May 2023. This amount represents a slight (2%) increase over WHO’s previous 2022-2023 programme budget of $6.726 billion. See Table 1.

The programme budget represents a plan for the organization’s anticipated resources, but actual resources may deviate from the initial budgeted amounts over course of the biennium due to changing or unexpected circumstances, such as additional resources (revenue) provided to WHO for emergency responses or lower levels of support than expected. For example, in the previous biennium (2022-2023) WHO reported programme resources that totaled $8.4 billion due to additional funding in support of emergency operations, including COVID-19 response and polio eradication activities.

Recent WHO Programme Budgets

Revenue

WHO has two primary sources of revenue:

  • assessed contributions (set amounts expected to be paid by member-state governments, scaled by income and population) and
  • voluntary contributions (other funds provided by member states, plus contributions from private organizations and individuals).

Most assessed contributions are considered “core” funding, meaning they are flexible funds that are often used to cover general expenses and program activities. Voluntary contributions, on the other hand, are often “specified” funds, meaning they are earmarked by donors for certain activities. Although decades ago the majority of WHO’s revenue came from assessed contributions, more recently voluntary contributions have comprised the larger share of WHO’s budget. For example, in the previous budget period (2022-2023) assessed contributions totaled $956.9 million (12.1% of total revenue), voluntary contributions totaled $6.92 billion (87.5% of total revenue), and “other revenue” totaled $28.1 million (0.4%).2  See Figure 1.

World Health Organization (WHO) Revenue by Type, 2022-2023

Reliance on voluntary, relatively inflexible funding has, in WHO’s view, hampered its operations and effectiveness. In 2022, member states, including the U.S., agreed in principle to move toward more predictable, flexible funding for WHO and to reduce the role of specified voluntary contributions. Since then, member states have approved a 20% increase in assessed contributions for the 2024-2025 biennium, and instituted a goal to have 50% of WHO’s programme budget be financed through assessed contributions by 2030 (which could be linked to WHO first meeting certain organizational benchmarks). However, following the Trump Administration’s decision to withhold U.S. funding and withdraw from WHO altogether, some countries such as China have expressed opposition to the previously agreed-to increases in member contributions, raising concerns about the extent to which these increases will actually be enacted.

In 2024, member states also approved the launch of WHO’s first-ever “investment round, which aims to mobilize additional funding for WHO over the next four years. In its investment case for 2025-2028, WHO estimates it will need $11 billion to implement its global program of work (GPW) over this period, but member state assessments (core contributions) are likely to amount to $4 billion, leaving a $7 billion gap to fill with voluntary contributions and other donations. To help fill this gap, WHO held a series of meetings and “pledging moments,” culminating in a high-level event around the G20 leaders’ summit in Brazil in November 2024. Through this process, WHO reports it was able to generate an additional $3.8 billion in donor pledges through 2028, or 53% of its original goal of $7 billion. The Biden administration did not announce any additional pledges to WHO through the investment round, and now the Trump administration has said that it will cease funding the organization.

Challenges

WHO faces a number of institutional challenges, including:

  • a scope of responsibility that has expanded over time with little growth in core, non-emergency funding;
  • an inflexible budget dominated in recent years by less predictable voluntary contributions often earmarked for specific activities;
  • a cumbersome, decentralized, and bureaucratic governance structure; and
  • a dual mandate of being both a technical agency with health expertise and a political body where states debate and negotiate on sometimes divisive health issues.

These and other challenges were particularly evident during and after perceived failures of the agency in the response to the Ebola epidemic in West Africa (2014-2015), and in the criticisms directed at WHO as it tried to help coordinate a global response to the COVID-19 pandemic. Even as many member states continue to support WHO and recognize its importance for global health, many are also calling for reforms to the organization that would help address its weaknesses. WHO itself supports reforms in several areas and has taken some internal reform actions, while also launching its new “investment round” and ushering negotiation processes to revise the International Health Regulations and establish a new pandemic accord, each of which includes reforms to WHO practices.

U.S. Engagement with WHO

The U.S. government has long been engaged with WHO in multiple ways including through financial support, participation in governance and diplomacy, and joint activities (see below). In 2020, after the onset of the COVID-19 pandemic, the first Trump administration suspended financial support and initiated a process to withdraw the U.S. from membership in the organization.3  Under the Biden administration, U.S. relations with the organization were re-established in January 2021, and U.S. funding to WHO was restored.4  However, on January 20, 2025 President Trump signed an Executive Order in his first day of office to once again suspend U.S. contributions to WHO, withdraw U.S. membership, and recall all U.S. personnel working with the organization. Under the guidelines in the WHO Constitution, the withdrawal of a member state from the organization becomes official after one year after notice is given. The Trump Administration submitted a formal letter of withdrawal, and the United Nations has said U.S. membership in WHO will officially end on January 23, 2026.

Financial Support

One of the main ways in which the U.S. government supports WHO is through its assessed and voluntary contributions (which have now been halted under the new Executive Order from President Trump). The U.S. has historically been the single largest contributor to WHO. In the 2020-2021 period (when the Trump administration withheld some U.S. funding during the COVID-19 pandemic), it was the third largest since other donors, notably Germany and the Bill and Melinda Gates Foundation, increased their contributions in response to COVID-19.  The Biden administration restored funding starting in 2021 and in the 2022-2023 period the U.S. was once again the largest contributor to WHO.

For many years, the assessed contribution for the U.S. has been set at 22% of all member state assessed contributions, the maximum allowed rate. Between FY 2015 and FY 2024, the U.S. assessed contribution has been fairly stable, fluctuating between $109 million and $122 million (in FY 2019 and FY 2020 the U.S. actually paid less than its assessed amount, and in FY 2021 it paid more than that amount due to payments made toward outstanding arrears). See Figure 2.

Voluntary contributions for specific projects or activities, on the other hand, have varied to reflect changing U.S. priorities and/or support during international crises. Over the past decade, U.S. voluntary contributions have ranged from a low of $105 million in FY 2020 to a high of $694 million in FY 2022. Higher amounts of voluntary contributions can be reflective of increased U.S. support for specific WHO activities such as emergency response. U.S. voluntary contributions also support a range of other WHO activities such as polio eradication; maternal, newborn, and child health programs; mental health services for victims of torture and trauma; health coordination in COVID-19 response; and other infectious diseases.

U.S. Contributions to the World Health Organization (WHO), by Type of Contribution, FY 2015-FY 2024 (in millions)

WHO reports that U.S. assessed and voluntary contributions together represented 15.6% of WHO’s total revenue in the 2022-2023 biennium, making the U.S. the largest donor to WHO during that period.

Governance Activities

In the past, the U.S. had been an active participant in WHO governance, including through the Executive Board and the World Health Assembly (WHA), though under the new Executive Order from President Trump, all official U.S. participation in WHO has been halted. The U.S. held a seat on the WHO Executive Board when the Executive Order was issued in January 2025.5  The U.S. had historically been an active and engaged member of the WHA, sending a large delegation each year that has typically been led by a representative from the Department of Health and Human Services, with multiple other U.S. agencies and departments also participating. The U.S. was also actively participating in the negotiations to develop a new pandemic agreement and participated in the recent process to update and amend the IHR agreement.

Technical Support

The U.S. had, in the past, provided technical support to WHO through a variety of activities and partnerships. This includes U.S. government experts and resources supporting research and reference laboratory work via WHO collaborating centres6  and participation of U.S. experts on advisory panels and advisory groups convened by WHO. The U.S. contributions to WHO collaborating centres have included technical areas such as cancer, occupational health, nutrition, chronic diseases, and improving health technologies.7  In addition, U.S. government representatives were often seconded to or have served as liaisons at WHO headquarters and WHO regional offices, working day-to-day with staff on technical efforts, though those personnel have been recalled under the new Trump Administration Executive Order.8 

Partnering Activities

The U.S. has also worked in partnership with WHO before and during responses to outbreaks and other international health emergencies, including participating in international teams that WHO organizes to investigate and respond to outbreaks around the world. For example, the U.S. worked with WHO and the broader multilateral response to the Ebola epidemic in West Africa that began in 2014, and U.S. scientists were part of the WHO delegation that visited China in February 2020 to assess its response to COVID-19. To help further develop areas of partnership and coordination, the Biden administration had instituted semi-regular “strategic dialogue” meetings to create a regular forum for discussions between key U.S. and WHO officials.

  1. These include: AFRO (Africa), EMRO (Eastern Mediterranean), EURO (Europe), PAHO (The Americas), SEARO (Southeast Asia), and WPRO (Western Pacific). ↩︎
  2. WHO. Contributors 2022-2023. http://open.who.int/2022-23/contributors/contributor. Data through December 2023. Accessed April 2, 2024. “Other revenue” includes contributions to the PIP (pandemic influenza preparedness) partnership. ↩︎
  3. Trump Administration/White House. “President Donald J. Trump Is Demanding Accountability From the World Health Organization.” Fact Sheet. April 15, 2020; Trump Administration/White House. Letter to Dr. Tedros Adhanom Ghebreyesus, WHO Director-General from President Trump. May 18, 2020.; Trump Administration/White House. “Remarks by President Trump on Actions Against China.” Remarks by President Trump on May 29, 2020. May 30, 2020; Trump Administration/U.S. Department of State. “Update on U.S. Withdrawal from the World Health Organization.” Press Statement by Morgan Ortagus, Department Spokesperson. Sept. 3, 2020. https://2017-2021.state.gov/update-on-u-s-withdrawal-from-the-world-health-organization/index.html. ↩︎
  4. White House, “Letter to His Excellency António Guterres,” correspondence from President Biden, Jan. 20, 2021, https://www.whitehouse.gov/briefing-room/statements-releases/2021/01/20/letter-his-excellency-antonio-guterres/; Associated Press. ‘Biden’s US revives support for WHO, reversing Trump retreat’. January 2021. https://apnews.com/article/us-who-support-006ed181e016afa55d4cea30af236227; HHS, “Dr. Anthony S. Fauci Remarks at the World Health Organization Executive Board Meeting,” Jan. 21, 2021, https://www.hhs.gov/about/news/2021/01/21/dr-anthony-s-fauci-remarks-world-health-organization-executive-board-meeting.html. ↩︎
  5. WHO. “Composition of the Board: Members of the Executive Board and Term of Office.” Webpage. https://apps.who.int/gb/gov/en/composition-of-the-board_en.html; White House. Fact Sheet: The Biden Administration’s Commitment to Global Health. February 2022. https://www.whitehouse.gov/briefing-room/statements-releases/2022/02/02/fact-sheet-the-biden-administrations-commitment-to-global-health/. ↩︎
  6. WHO collaborating centres are “institutions such as research institutes, parts of universities or academies, which are designated by the Director-General to carry out activities in support of” WHO programs; see: WHO. “Collaborating centres” https://www.who.int/about/collaboration/collaborating-centres . ↩︎
  7. For example, the U.S. CDC activities support centres such as the WHO Collaborating Centre for International Monitoring of Bacterial Resistance to Antimicrobial Agents (https://apps.who.int/whocc/Detail.aspx?mDXUc+J7YSsPRDN4ElrZNw==), the WHO Collaborating Centre for Injury Control (https://apps.who.int/whocc/Detail.aspx?XidWfagjyJM57zUuxiHDVg==). (https://apps.who.int/whocc/Detail.aspx?xIVob4SPT2jc+ZYjM7fcSQ==) and the WHO Centre for Surveillance, Epidemiology and Control of Influenza (https://www.cdc.gov/flu/weekly/who-collaboration.htm). ↩︎
  8. CDC. Global Health Partnerships. https://www.cdc.gov/global-health/partnerships/. ↩︎

How Does the Department of Health and Human Services (HHS) Impact Health and Health Care?

Author: Rakesh Singh
Published: Jan 21, 2025

With President Trump now in office, his cabinet nominees continue to testify at congressional hearings as part of the nomination process. Robert F. Kennedy Jr. is the nominee to be the secretary of the Department of Health and Human Services (HHS), and his nomination hearings will spotlight a range of HHS activities but may not touch on the full scope of the department’s responsibilities. To better understand HHS’s impact on the health care system and the American people’s coverage, public health, safety, and well-being, what follows is an overview of the activities of the department.

Overview of HHS

The Department of Health, Education, and Welfare was established in 1953 and evolved into the Department of Health and Human Services in 1980 after the Department of Education was established as an independent entity. A relatively new department of the 15 current executive branch departments, HHS has a Fiscal Year (FY) 2024 budget funding estimated at $1.7 trillion, and the department’s budget is about a quarter of the total FY 2024 U.S. federal budget. It has the largest budget of any federal agency and is the largest grant-making agency.

Most federal executive branch health policy is implemented and managed within HHS, though the White House typically plays a major role in policymaking. The department has 13 operating divisions, most of which have a health focus in areas of coverage, research, regulation, resource delivery, and training. Others are focused on social assistance and support for families and communities in need. More than 80,000 HHS employees are located across the U.S. and the world and half of the workforce is outside the greater Washington, D.C. area.

The Public Health Service (PHS) predates HHS and now exists across ten of the 13 operating divisions within the department:

  • The Administration for Strategic Preparedness and Response (ASPR)
  • The Advanced Research Projects Agency for Health (ARPA-H)
  • The Agency for Healthcare Research and Quality (AHRQ)
  • The Agency for Toxic Substances and Disease Registry (ATSDR)
  • The Centers for Disease Control and Prevention (CDC)
  • The Food and Drug Administration (FDA)
  • The Health Resources and Services Administration (HRSA)
  • The Indian Health Service (IHS)
  • The National Institutes of Health (NIH)
  • The Substance Abuse and Mental Health Services Administration (SAMHSA)

Led by the Assistant Secretary of Health and the U.S. Surgeon General, the more than 6,000 United States Public Health Service Corps work across HHS and several other federal departments in everyday roles involving their health expertise, but they are also the country’s frontline workers for emergency response including public health emergencies.

Health Care Coverage and Affordability

The largest division of HHS is the Centers for Medicare and Medicaid Services (CMS), responsible for administering or overseeing health insurance coverage for Medicare, Medicaid, the Children’s Health Insurance Program, and the Affordable Care Act’s Health Insurance Marketplaces. Together, these programs provide health coverage access to 170 million Americans—more than half the population. However, the impact of HHS on the nation’s health insurance system goes well beyond the programs it administers, as it is heavily involved in the federal regulation of private health insurance, including employer-sponsored health insurance covering more than 150 million people, in conjunction with the Departments of Labor and the Treasury.

Beyond the core health insurance programs CMS administers, HHS also supports access to health care services in several other ways. Community health centers provide primary care and some additional services to low-income and uninsured populations and often serve special populations, e.g., people experiencing homelessness, migratory agricultural workers, and rural residents. HHS has a central role in setting standards and providing significant funding through various sources. HHS also provides medical and public health care to American Indians and Alaskan Natives through a network of providers run or contracted by the Indian Health Service. It has programs addressing the needs of specific populations, including the Ryan White HIV/AIDS program, refugee health, mental health and substance use treatment programs, and maternal and child health, to name a few.

Public Health and Disease Control

The public health role of HHS has been in the spotlight due to the COVID-19 pandemic, but its role during the crisis was based on pre-existing infrastructure and routine activities that adapt to the needs of the day. The department has a long-standing role in monitoring, preventing, and reducing the spread of infectious and non-communicable diseases. Its role encompasses a wide range of responsibilities, including research, screening, policy development and guidance, public education, treatment, and funding for state and local health departments.

Aside from COVID-19, HHS has been active in addressing infectious disease outbreaks of H5N1 avian flu, mpox, and hepatitis A in the past five years and works on long-term challenges like the HIV/AIDS epidemic. The role of HHS in vaccination dates back to the 1950s polio vaccine and it continues to have a substantial role in influencing the country’s vaccine policy.

Emergency Preparedness and Response

The routine health activities of HHS often merge with its role in addressing the health impacts of public emergencies and disasters. Events like the September 11, 2001, terrorist attacks, the opioid epidemic, the Flint, Michigan water crisis, natural disasters of hurricanes, tornadoes, and wildfires, and disease outbreaks have all triggered an HHS response in conjunction with other federal agencies.

HHS has provided emergency coordination and strategic planning to set up shelters for acute medical care and mental health support, sometimes utilizing the National Disaster Medical System, accessed stockpiles of critical equipment and medicine, led investigations and expanded on testing and monitoring activities, and assisted with survivor and community recovery including continuity of health care services.

Food and Drug Safety

Arguably, the broadest touch point for HHS’ impact on Americans’ daily lives is its role in food safety. The Food and Drug Administration (FDA) oversees most food safety aside from meat and poultry and shares responsibility for egg products with the Department of Agriculture. It also regulates the information about dietary supplements provided to consumers, though it does not have authority to approve them for safety and effectiveness. Among the activities related to food safety are conducting inspections of facilities, labeling requirements, issuing food recalls and alerts, and ensuring imported food meets U.S. standards. However, the FDA isn’t the only HHS agency that plays a significant role in food safety, as the Centers for Disease Control’s broad role of monitoring and responding to disease outbreaks also includes those related to consuming contaminated food.

HHS has a major role in regulating medical drugs and devices, mainly through the FDA. This includes pre-market testing for the safety and effectiveness of a product’s intended use, monitoring of approved products for any harm to consumers, and regulations for producing and labeling such products.

Scientific Research and Innovation

HHS, primarily through the National Institutes of Health, is the world’s largest public funder of health research. While the research often conducted can center on the basics of science and biomedicine, it has led to breakthroughs like the first successful polio vaccine, treatments for cancer and HIV/AIDs, the development of MRI technology, and the ability to personalize medicine because of the mapping of the human genome.

Supporting Families and Communities

The health of individuals can be impacted by several non-medical factors often categorized as social determinants of health. HHS has a range of social service programs that may not be typically considered health services, but usually factor in the stability of individual and family lives.

Financial assistance for low-income families with children has long been a federal program, and Temporary Assistance for Needy Families (TANF) is the primary cash assistance program for this population. TANF is administered by the HHS Administration of Children and Families (ACF) which also has programs related to child support enforcement, foster care, adoption, and child care. It also promotes early childhood development in low-income children under the age of five through Head Start.

One element of the department’s support services that has gained significant attention over the past decade, particularly as refugee resettlement submissions to the U.S. have sharply increased, is the array of services offered by the Office of Refugee Resettlement (ORR). Established 45 years ago, ORR aims to integrate individuals, including unaccompanied minors, and families into American society and provide a pathway to self-sufficiency. Services offered include financial assistance, housing, medical care, and employment services.

Medicaid Postpartum Coverage Extension Tracker

Published: Jan 17, 2025

The Medicaid program finances about 4 in 10 births in the U.S. Federal law requires states to provide pregnancy-related Medicaid coverage through 60 days postpartum. After that period, some postpartum individuals may qualify for Medicaid through another pathway, but others may lose coverage, particularly in non-expansion states. To help improve maternal health and coverage stability and to help address racial disparities in maternal health, a provision in the American Rescue Plan Act of 2021 gave states a new option to extend Medicaid postpartum coverage to 12 months via a state plan amendment (SPA). This new option took effect on April 1, 2022 and was originally available for five years; however, the option was made permanent by the Consolidated Appropriations Act 2023. The Centers for Medicare and Medicaid Services (CMS) released guidance on December 7, 2021 on how states could implement this option.

States that sought to implement extended postpartum coverage prior to April 1, 2022 have done so through a section 1115 waiver or by using state funds. This page tracks state actions to implement extended Medicaid postpartum coverage, including states that have implemented a 12-month postpartum extension, states that are planning to implement a 12-month extension, states with pending legislation to seek federal approval through a SPA or 1115 waiver, and states that have proposed or received approval for a limited coverage extension.

Medicaid Postpartum Coverage Extensions: Approved and Pending State Action as of January 17, 2025

Postpartum Coverage Tracker MapP

Medicaid Postpartum Coverage Extensions: Approved and Pending State Action as of January 17, 2025

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How Many Physicians Have Opted Out of the Medicare Program?

Published: Jan 17, 2025

Medicare provides health insurance coverage to 67 million adults—20% of the U.S population—and is a major source of revenue for physicians and other health providers. In 2024, Medicare spending on Part B services (including physician services, outpatient services, and physician-administered drugs) accounted for nearly half (49%) of total Medicare benefit spending. Physicians are not required to participate in Medicare, though the vast majority of them choose to do so.

In recent years, physician groups and some policymakers have raised concerns that physicians would opt out of Medicare due to reductions in Medicare payments for many Part B services, potentially leading to a shortage of physicians willing to treat people with Medicare. Medicare payments are lower, on average, than payments from private insurers and are not automatically indexed to keep pace with inflation in medical practice costs. Every year, as required by law, the Centers for Medicare & Medicaid Services (CMS) updates Medicare payments to physicians under the physician fee schedule through rulemaking. Since 2021, Congress has enacted four temporary, one-year increases to physician payment rates to soften scheduled cuts. However, Congress has not enacted a payment increase for 2025, and a 2.93% drop in average Medicare payments to physicians went into effect on January 1.

Despite these ongoing concerns, virtually all (98%) of non-pediatric physicians participate in the Medicare program. Furthermore, Medicare beneficiaries report access to physician services that is equal to, or better than, that of privately-insured individuals, with similar shares reporting delays in needed care or difficulty finding a physician who takes their insurance.

This brief uses the most recent CMS data to document the extent to which non-pediatric physicians have opted out of Medicare, by specialty and by state, as of November 2024, updating prior KFF analyses. (See Methods for details).

Key Takeaways:

  • About one percent of all non-pediatric physicians have formally opted out of the Medicare program in 2024. The share was highest for psychiatrists (8.1%), followed by plastic and reconstructive surgeons (4.5%) and neurologists (3.2%).
  • In 11 specialties, the share of physicians who have opted out of Medicare is 0.5% or lower, with the lowest shares seen among emergency medicine physicians (0.1%), oncologists (0.1%), radiologists (0.1%), and pathologists (<0.1%).
  • Psychiatrists account for the largest share (39.0%) of all non-pediatric physicians who have opted out of Medicare in 2024, followed by family medicine physicians (21.5%) and internal medicine physicians (13.0%).
  • Less than two percent of non-pediatric physicians have opted out of Medicare in 47 states. The rate is slightly higher in three states and the District of Columbia: Alaska (2.8%), Colorado (2.3%), Idaho (2.2%), and the District of Columbia (2.9%).

Three options for physicians

Currently, physicians and other health providers seeking payment from Medicare for Part B services must enroll as a Medicare provider. Physicians may either agree to be a participating provider or non-participating provider. Providers who do not want to enroll in Medicare or receive Medicare payments are required to sign an “opt out” agreement with their patients.

  • Participating providers agree to accept “assignment” on all Medicare claims for all of their Medicare patients, which means that they have signed a participation agreement with Medicare, agreeing to accept Medicare’s fee schedule amounts as payment-in-full for all Medicare covered services. Medicare beneficiaries seeing a participating provider can only be liable for the cost sharing required by Medicare. Providers have several incentives to be participating providers, such as being paid higher rates (5% higher) than the rates paid to non-participating providers. In 2022, the vast majority (98%) of physicians and practitioners billing Medicare were participating providers.
  • Non-participating providers accept Medicare patients, but can choose whether to take assignment (i.e., Medicare’s approved amount) on a claim-by-claim basis. Unlike participating providers, who are paid the full Medicare-allowed payment amount, non-participating physicians who take assignment are limited to 95% of the Medicare approved amount. In 2022, 7% of fee schedule claims were paid on assignment. Physicians who choose to not accept assignment can charge beneficiaries up to 15% more than the Medicare-approved amount, a process known as “balance billing.” Medicare patients are financially liable for this additional amount plus applicable deductibles and coinsurance.
  • Opt-out physicians and other practitioners must sign an affidavit to “opt out” of the Medicare program entirely. These providers enter into private contracts with their Medicare patients, allowing them to bill any amount they determine is appropriate. Providers who have opted out of the Medicare program must opt out for all of their Medicare patients, including those enrolled in Medicare Advantage. Medicare patients seeing a provider who has opted out of the Medicare program must sign this agreement and agree to be financially responsible for the entire cost of any services received. Neither the provider nor the patient can submit a bill to Medicare for reimbursement of any service covered under Medicare Part B. Opt-out agreements last for two consecutive years and are automatically renewed at the end of each two-year period.

What share of physicians have opted out of Medicare?

1.2 percent of non-pediatric physicians have formally opted out of the Medicare program. As of November 2024, 12,244 non-pediatric physicians have opted out of Medicare, representing a very small share (1.2%) of the total number active physicians, similar to the shares reported in 2013 and 2022 (Figure 1).

Few (1.2%) Physicians Have Formally Opted-Out of Medicare in 2024

While the overall opt-out rate is low, opt-out rates are somewhat higher for certain specialties, such as psychiatry and plastic and reconstructive surgery. In 2024, 8.1% of psychiatrists have opted out of Medicare, followed by 4.5% of physicians specializing in plastic and reconstructive surgery and 3.2% of physicians specializing in neurology (Figure 2).

Top 10 Specialties with the Highest Share of Physicians Opting-Out in Specialty, 2024

On the other hand, of the 26 specialty groups included in this analysis, 11 have opt-out rates that are 0.5% or lower, with the lowest rates seen among physicians specializing in emergency medicine (0.1%), oncology (0.1%), radiology (0.1%), and pathology (<0.1%) (Appendix Table 1).

Psychiatrists are disproportionately represented among the 1.2 percent of active physicians who have opted out of Medicare. Psychiatrists account for the largest share (39.0%) of opt-out physicians, followed by physicians in family medicine (21.5%), internal medicine (13.0%), and obstetrics/gynecology (5.9%) (Figure 3). This is consistent with prior analyses that found that psychiatrists are less likely than other physician specialties to accept new patients with Medicare or private insurance, suggesting that psychiatrists may prefer to be paid directly by their patients, in order to avoid the administrative burden of submitting claims to insurers and maintain the flexibility to charge higher fees.

Figure 3: Psychiatrists Accounted for the Largest Share of Physicians Opting Out of Medicare in 2024

In addition to physicians, another 4,474 select clinical professionals with doctorate degrees (i.e. oral surgeons, podiatrists, and optometrists) have also opted out of the Medicare program, with oral surgeons accounting for the vast majority (93.9%) of this group (Appendix Table 1).

Less than two percent of physicians have opted out of Medicare in all but three states and the District of Columbia. As of November 2024, the District of Columbia (2.9%), Alaska (2.8%), Colorado (2.3%), and Idaho (2.2%) have the highest rates of non-pediatric physicians who have opted out of Medicare (Figure 4). In twelve states (Alabama, Arkansas, Iowa, Kentucky, Minnesota, Mississippi, Nebraska, North Dakota, Ohio, South Dakota, West Virginia, and Wisconsin) the opt-out rate is 0.5% or lower (Appendix Table 2).

In 47 States, Less Than 2 Percent of Active Non-Pediatric Physicians Have Opted Out of Medicare

Due to data limitations, this analysis only includes opt-out rates at the state level. Opt-out rates may vary based on rural status and other county-level factors, and some counties may have opt-out rates that are higher than the state average.

Appendix

Supplemental Tables

Number and Share of Physicians and Select Other Clinicians Formally Opting Out of Medicare, by Specialty, 2024

Number and Share of Physicians Formally Opting Out of Medicare, by State, 2024

Methods

This analysis uses Medicare opt-out affidavit data from the Centers for Medicare & Medicaid Services (CMS), as of November 2024. The scope of this analysis was limited to non-pediatric physicians, given its Medicare focus, as well as a select group of other clinicians with doctorates: optometrists, oral surgery, and podiatrists. Therefore, pediatricians and other non-physician specialists, such as certified nurse midwives, clinical social workers, and physician assistants, were excluded from the total number of opt-out physicians. Of note, while some clinicians under the oral surgery specialty group may also hold a medical degree (MD or DO), for the purpose of this analysis, these physicians were grouped in accordance with the primary specialty (oral surgery) associated with their National Provider Identifier (NPI) in CMS’ opt-out file.

This analysis obtained data on the number of active allopathic and osteopathic physicians by specialty and state from Redi-data, Inc, which utilizes data from the American Medical Association (AMA) Physician Masterfile. One limitation of this analysis is that due to data source limitations, it was not possible to exclude active physicians involved in professional activities other than patient care, such as research and administration. We were also unable to examine opt-out rates based on the ownership characteristics of physicians (e.g., hospital-owned vs physician-owned practices). Further, we were unable to examine out-out rates by rural status due to lack of county-level opt-out data.

The specific physician specialty groups identified in this analysis were selected if they were included in the list of opt-out providers provided by CMS. In order to gain a more complete picture of the distribution of opt-out providers in each specialty category, this analysis grouped some subspecialties under a broader specialty category, consistent with the specialty cross-walk provided by Redi-Data, Inc. More specifically, anesthesiology includes pain management and interventional pain management, obstetrics and gynecology includes reproductive endocrinology, and preventive medicine includes occupational medicine. The internal medicine category includes the following subspecialties: internal medicine (not otherwise specified), critical care medicine, gastroenterology, hematology, hospice & palliative medicine, infectious disease, nephrology, pulmonary disease, and rheumatology. The surgery category includes the following subspecialties: cardiac surgery, colorectal surgery, general surgery, hand surgery, micrographic dermatologic surgery, thoracic surgery, and vascular surgery. The following subspecialties are included in the “other” category: addiction medicine, cosmetic surgery aesthetic medicine, Doctor of Medicine, hospitalist, integrative medicine, undefined physicians, sleep medicine, osteopathic manipulative medicine, and medical toxicology.

 

Title 42 and its Impact on Immigration and Migrant Families

Published: Jan 17, 2025

Introduction

Title 42 of the Public Health Services Act is a public health authority that authorizes the Director of the Centers for Disease Control and Prevention (CDC) to suspend entry of individuals into the U.S. to protect public health. This rarely utilized authority was implemented by the Trump administration in March 2020 in response to the COVID-19 pandemic to allow for quick expulsion of migrants, including asylum seekers, seeking entry into the U.S. at the land borders. After a series of delays due to court challenges, the restrictions were lifted when the Biden Administration declared an end to the COVID-19 public health emergency (PHE) on May 11, 2023. The Biden administration subsequently took increasingly restrictive executive action to restrict border entry.

Land border entries into the U.S. decreased as a result of Title 42 since individuals who had border encounters under this authority were immediately expelled due to the public health threat outlined by the Trump administration. However, research suggests that Title 42 restrictions did not result in a “better managed border” and increased cases of unauthorized re-entry, and public health experts stated that it put the health and well-being of migrants at risk. Recent reports suggest President-elect Trump may reinvoke Title 42 restrictions during his second term to close the border between the U.S. and Mexico, along with a number of other actions to restrict immigration.

This brief provides an explanation of Title 42 and its application in border regions, the impact of Title 42 on border expulsions and the health and well-being of migrants during COVID-19, and a discussion of the potential implications of reinvoking Title 42 restrictions for immigration and the health of migrants.

What are policies for migrants seeking entry at the U.S. border?

Under U.S. immigration law, individuals have a legal right to claim asylum when presenting at U.S. ports of entry. An asylee is an individual already present in the U.S. or seeking admission at a port of entry who is seeking protection based on “persecution or a well-founded fear of persecution on account of their race, religion, nationality, membership in a particular social group, or political opinion.” In fiscal year (FY) 2023, the U.S. granted asylum to over 54,000 individuals from close to a dozen different countries. However, as of October 2024, over 90% of asylum cases filed in FY 2023 were still pending with only 2% being granted approval due to immigration backlogs.

Migrants encountered at the border are processed and screened for asylum under Title 8 of the U.S. Code addressing “Aliens and Nationality. Under Title 8, those determined to have a credible fear of persecution or other threats in their home country are either held in custody or released into the U.S. while their case is pending in immigration court. Those who the U.S. Citizenship and Immigration Services (USCIS) determine not to have a credible fear are permitted to appeal this decision to an immigration judge. If an individual chooses not to appeal or the immigration judge did not find fear, then the individual is removed.

In June 2024, the Biden administration took executive action to suspend and limit the entry of migrants at the southern border, including asylum seekers, to “address the historic levels of migration and more efficiently process migrants arriving at the southern border. Under this rule, the suspension of entry will go into effect immediately after there have been 2,500 or more average daily border encounters (not including unaccompanied children) over seven consecutive days and can be lifted once there have been fewer than 1,500 average daily border encounters over seven consecutive days. As of April 2024, there were about 4,000 average daily border encounters, leaving the restrictions in place. U.S. Customs and Border Patrol (CBP) data show that border encounters following the executive order were at a three-year low with there being a 29% reduction in encounters between May and June 2024.

How did Title 42 change policy for migrants seeking entry at the border during the COVID-19 pandemic?

In March 2020, the Trump administration implemented Title 42 under the Public Health Service Act, which allowed for the immediate expulsion of migrants without screening for asylum. This order applied to all migrants arriving to the U.S. from Canada or Mexico regardless of their country of origin who would otherwise be held in a congregate setting at a port of entry or border patrol station. It did not apply to lawful permanent residents and their families, members of the armed forces or their families, or people who hold valid travel documents such as tourists or those in a visa waiver program. Officials also had authority to make exceptions for individuals on a case-by-case basis. Under this order, the CDC Director was authorized to “suspend the introduction of persons into the United States” and CBP officials were directed to process migrants promptly (within 15 minutes in an outdoor setting) without screening for asylum and expel them back to Mexico or Canada or their country of origin. The CDC stated the purpose of the order was to protect CBP personnel, U.S. citizens, lawful permanent residents, and other individuals from an increase in COVID-19 spread at land ports of entry, Border Patrol stations, and in the interior of the country. The order pointed to the introduction of individuals into congregate settings at the border and the increased strain this would put on the U.S. health care system during a public health emergency as primary reasons for implementing the restrictions on entry.

Title 42 continued to be enforced under the Biden administration until the end of the COVID-19 PHE declaration in May 2023. However, unaccompanied minors were exempted from the order based on a district court ruling in November 2020 and by a CDC order issued under the Biden administration in February 2021. The CDC order continued to apply the original Title 42 order to single adults and families. After facing legal challenges, Title 42 restrictions were lifted in May 2023 following the end of the COVID-19 PHE declaration.

How did implementation of Title 42 impact immigration and the health of migrants?

Between FY 20211  and 2023, there were over 6.5 million encounters at the Southwest land border of which about four in ten (41%) were under Title 42 authority. Enforcement encounters refer to “apprehensions or inadmissibles processed under CBP’s immigration authority;” these include individuals apprehended under Title 8 as well as individuals expelled under Title 42. While Title 42 applies to both the Northern and Southwestern Borders, nearly all Title 42 encounters occurred at the Southwestern Border. Between FY 2021 and FY 2023, Title 42 encounters at the Southwest Border accounted for about four in ten (41%) of all Southwest Border encounters. The share of encounters that were under Title 42 varied by demographic group with Title 42 accounting for a majority (56%) of single adult encounters and one in six (17%) family encounters, while Title 8 accounted for virtually all (99%) encounters with unaccompanied minors reflecting their exemption from expulsion under Title 42 (Figure 1).

Southwest Border Encounters by Title of Authority and Demographic, 2021 - 2023

As of May 2023, there were over 2.5 million single adult expulsions, nearly 320,000 expulsions of individuals in a family unit, and nearly 16,000 expulsions of unaccompanied minors under Title 42. The number of family expulsions under Title 42 grew between FY 2020 and FY 2021, while expulsions of unaccompanied minors decreased, reflecting their exemption beginning in February 2021. These encounter counts reflect repeat encounters with individuals, as each attempt by the same individual to cross the border is counted as a new encounter.

Title 42 Southwest Border Encounters by Demographic Groups, 2020 - 2023

Data indicate that Title 42 did not lead to a reduction in border encounters, but border entries into the U.S. went down due to the nature of the authority. While Title 42 was intended to reduce COVID-19 exposure risk at the border, it led to an increasing number of encounters at the border largely due to repeat encounters. This is in large part because, unlike Title 8, migrants apprehended under Title 42 were immediately expelled and those with repeat encounters did not face any penalties. Data from 2020 through 2023 suggest that while there were close to 3 million Southwest border expulsions under Title 42 authority, many of those expulsions were of the same individuals making repeated attempts to cross the border. In the last 6 months of 2021, a quarter of the encounters under Title 42 were of the same individuals on multiple occasions, with recidivism rates under the authority being at their highest levels in over a decade. In addition, there has not been a significant increase in border encounters since Title 42 was lifted with border encounters in FY 2024 (2.1 million) being lower than border encounters in FY 2022 (2.4 million) and FY 2023 (2.5 million). However, entries into the U.S. through land borders decreased as a result of Title 42 since individuals who had border encounters under this authority were immediately expelled due to the public health threat outlined by the Trump administration.

Research suggests Title 42 expulsions negatively impacted the health and well-being of migrant families while having little to no impact on preventing the spread of COVID-19 in the U.S. Physicians, epidemiologists, and public health experts repeatedly stated that Title 42 was counterproductive to preserving health and protecting individuals from COVID-19. Physicians suggested that being in close proximity with other individuals while being temporarily detained or transported back to Mexico, lack of medical screenings, and lack of provision of necessary medication could have adverse impacts on physical and mental health. Typically, the CDC recommends that asylees be provided an initial medical screening within 30-60 days of arriving in the U.S., but since Title 42 called for immediate expulsion, such screenings were not provided. Interviews conducted with over two dozen asylum seekers who were expelled under Title 42 authority found that a vast majority reported symptoms of depression, anxiety, and post-traumatic stress disorder (PTSD), and many reported that their children’s mental health was also impacted. Sending individuals back to potentially dangerous situations they were fleeing also poses risks. Title 42 may also have contributed to increases in family separations at the border. Media reports suggested that some families were separating from their children so that the children could seek entry as unaccompanied minors, who were exempt from Title 42 expulsions. These separations may have led to children facing dangerous situations traveling to the border and expose them to trauma and toxic stress. The impact of Title 42 on migrant families may also have been exacerbated by the “Remain in Mexico” or Migrant Protection Protocols program implemented under the first Trump administration, which required thousands of migrants (including children) to wait for their U.S. immigration court hearings in Mexican border towns that can be dangerous and unsafe. Close to 80% of migrants receiving medical treatment from Doctors without Borders/Medecins Sans Frontieres at border locations in Nuevo Laredo, Mexico, reported being victims of violence, with many experiencing depression, severe anxiety, and post-traumatic stress.

What are the potential implications of reinvoking Title 42?

The incoming Trump administration has indicated plans to reinvoke Title 42. President-elect Trump has proposed an array of policies focused on restricting immigration. Recent reports suggest that the incoming Trump administration is planning to reinvoke Title 42 to restrict immigration under the rubric of public health protection. Experiences during COVID-19 suggest Title 42 was not effective at reducing border encounters or preventing COVID-19 and had negative health impacts for migrants. Reinvocation of such a policy also raises questions about its use as a border enforcement tool and could potentially fuel xenophobic sentiment towards immigrants.

  1. U.S. Customs and Border Protection, “Nationwide Enforcement Encounters: Title 8 Enforcement Actions and Title 42 Expulsions Fiscal Year 2021”. Accessed January 2025. ↩︎