After months of partisan negotiations and wrangling over the federal budget, Congress finally agreed to spending levels for the remainder of fiscal year 2024, passing an omnibus funding bill on March 23, 2024, that was then signed by President Biden. Tucked into this agreement was a short-term reauthorization of the President’s Emergency Plan for AIDS Relief (PEPFAR, the U.S. government’s global HIV response), its fourth reauthorization. Widely regarded as one of the most successful global health programs in history and credited with saving millions of lives, PEPFAR had been caught up in the broader U.S. political debate over abortion, which had effectively stalled its reauthorization for the first time in what has otherwise been a long, bipartisan history of support. With the new omnibus bill, PEPFAR has been reauthorized until March 25, 2025, without the inclusion of any controversial provisions or changes related to abortion, sought by some. Still, while this latest step provides the program with some short-term certainty, including signaling bipartisan support (albeit limited), it marks a significant departure from PEPFAR’s past. The outcome of the presidential election and Congressional races determining control of the House and Senate could have significant implications for PEPFAR and the millions of people it serves.

Why PEPFAR Reauthorization Was Stalled

As we explored in an earlier analysis, the latest reauthorization of PEPFAR was drawn into the broader U.S. debate about abortion, even though U.S. law prohibits the use of U.S. foreign assistance, including PEPFAR funding, for abortion. The Biden administration and a wide range of stakeholders had been seeking a five-year, “clean” reauthorization of PEPFAR (an extension of the dates of expiring provisions without any changes to program language or requirements), but abortion was first publicly raised in PEPFAR reauthorization discussions in early May. A coalition of organizations opposed to abortion rights, a conservative think tank’s report, and a member of Congress raised concerns that PEPFAR may be supporting abortion, and they criticized the Biden administration’s support for global sexual and reproductive health and rights, including in PEPFAR’s latest strategy document. There was also a call for Congress to reinstate and apply the “Mexico City policy” to PEPFAR (see box).

In response, PEPFAR stated that it does not provide a platform for abortion, sent official communication to its implementers regarding current law and policy in this area, and revised its strategy to clarify that “sexual and reproductive health services” has a specific meaning in the PEPFAR context and reiterated that “PEPFAR does not fund abortions, consistent with longstanding legal restrictions on the use of foreign assistance funding related to abortion. In addition, no evidence was produced to indicate that PEPFAR supported any prohibited activities. Despite the lack of evidence, however, reauthorization of the program was effectively stalled, and there was uncertainty about whether the program would be reauthorized again.

What the Omnibus Bill Does, and the Difference Between Authorizing and Appropriations Legislation

The omnibus funding bill that passed on March 23, 2024, funds the government for the remainder of the current fiscal year and also included a short-term reauthorization of PEPFAR, marking the fourth time PEPFAR has been reauthorized (although each prior time, it was reauthorized for five-year periods; see Table 1). The language in the bill extended eight time-bound requirements in PEPFAR’s legislation through March 25, 2025 (essentially, halfway through FY 2025). These included seven provisions that had “sunset” or expired at the end of FY 2023 (September 30, 2023) and one provision that would have sunset at the end of FY 2024 (see Table 2). These requirements will “sunset” again if not addressed through a future PEPFAR reauthorization or another legislative vehicle.

More generally, there is an important distinction between “authorizing” and “appropriations” legislation. Authorizing (or reauthorizing) legislation establishes programs and policies, oversight and reporting requirements, and provides guidance to appropriators on funding amounts and conditions. It may include time-bound provisions or may provide no end date for programs to operate, which they can do as long as they are funded. Such legislation can be put forward as a standalone bill or attached to another legislative vehicle, such as appropriations legislation (which is the case with this latest omnibus bill). Appropriations legislation provides budget authority, allowing funding to be provided to an agency or program; absent an authorization (or reauthorization), an appropriations bill can have the effect of allowing the continued operation of an existing program by providing funding. PEPFAR was created in 2003 through authorizing legislation (The Leadership Act), which established the program, its structure, and other program aspects without including any end date or sunsetting of the program (with the exception of some provisions). This means that PEPFAR largely operates under permanent authorities of U.S. law that allow for the program to continue as long as Congress appropriates funding. The omnibus bill also appropriated bilateral funding for PEPFAR at the same level as the prior year.

Looking Ahead

After months of uncertainty surrounding reauthorization, which had created confusion and other challenges for the program, this latest step provides the program with some certainty for the time being. The short-term reauthorization signals a demonstration of bipartisan support, including by Congressional leadership – albeit limited – allowing it to move forward without any changes or controversial provisions around abortion (despite those sought by some). It also extends the program’s authorities past the next presidential election, thereby taking PEPFAR somewhat out of the direct line of sight of presidential politics for now. Finally, the bill also included funding for PEPFAR through the end of FY 2024 (which ends September 30, 2024).

At the same time, this latest development marks a departure from PEPFAR’s long-term history of strong support across party lines through multiple Congresses and administrations. It is possible that there will be more polarized debates over PEPFAR and its funding in the future, particularly as March 2025 and the end of the short-term reauthorization draws closer. Moreover, despite the latest reauthorization extending beyond the election, the outcome itself could have significant consequences for PEPFAR, beyond the debate about reauthorization. If President Trump is elected once again, he will almost certainly reinstate the Mexico City policy to apply to PEPFAR (and global health more generally), and it’s possible its reach could be expanded even further, including to encompass all U.S. foreign aid rather than just global health, as recommended in the Heritage Foundation’s Project 2025 report, intended as a blueprint for a Trump administration. While President Biden’s reelection would mean the Mexico City policy would remain rescinded, Republican control of one or both houses in Congress could result in continued controversy over PEPFAR and abortion. Regardless of electoral outcomes, the ground upon which PEPFAR sits has already shifted, potentially changing the political and programmatic calculus for PEPFAR in the years ahead.

Introduction

Federal funding for HIV has increased significantly over the course of the epidemic, rising from just a few hundred thousand dollars in FY 1982 to about $43.0 billion in FY 2022 for combined domestic and global efforts. However, it represents just a small fraction (<1%) of the overall federal budget of the United States. The majority of HIV funding (57%) in FY 2022, and the driver of growth in the HIV budget over time, was spending on mandatory domestic care and treatment programs through Medicaid and Medicare, as more people are living with HIV in the United States than ever before, new treatments have become available, and the cost of medical care has increased. In addition, greater investments to combat HIV in low and middle-income countries have also contributed to growth, though these have slowed since 2010. More generally, discretionary funding for HIV from Congress has brought only minor increases, primarily due to the Ending the HIV Epidemic effort, and most accounts have not kept pace with inflation over the last decade. In addition to federal funding, states also contribute to HIV care (primarily via their shared contributions to the Medicaid program), as do private insurance plans.

This fact sheet provides an overview of the federal HIV budget, including trends in federal funding between FY 2018 and FY 2022. Appendix A provides a full history of topline federal HIV funding from FY 1981 to FY 2022.Budget Categories

The federal HIV budget can be organized into five broad categories: care & treatment; cash & housing assistance; prevention; research; and global/international. More than two-thirds (67%) of the FY 2022 budget was for domestic care and treatment programs in the U.S.; 8% was for domestic cash/housing assistance; 3% was for domestic HIV prevention; 6% was for domestic HIV research; and 16% was for the global HIV efforts, including funding for international research.

Mandatory/Discretionary

Federal funding is either mandatory or discretionary. Mandatory spending, primarily for entitlement programs (such as Medicaid and Medicare), is determined by eligibility rules, enrollment, and the cost of services for those who are enrolled, and is not dependent on funding from Congress (e.g., if more people are enrolled and/or the cost of services goes up, mandatory spending will also increase). In FY 2022, mandatory spending for HIV accounted for $27.2 billion, or 63%, of the total HIV budget and includes estimated spending levels for: Medicaid, Medicare, Social Security Disability Insurance (SSDI), Supplemental Security Income (SSI), programs which provide health coverage and cash assistance. Mandatory spending has accounted for an increasing share of federal funding for HIV, rising from 52% of total HIV funding in FY 2012 to 63% in FY 2022, largely due to growth in Medicare and Medicaid spending.

Discretionary funding levels are determined by Congress each year through the appropriations process and may, or may not, match the full need for or cost of services. The remaining $15.7 billion (37%) of the federal HIV budget in FY 2022 was discretionary. It was slightly higher than the FY18 level ($14.4 billion). Of the FY 2022 amount, $8.7 billion (20% of the overall HIV budget and 55% of discretionary funding) was for domestic programs – prevention, research, housing, and non-mandatory care programs (e.g., the Ryan White HIV/AIDS Program). The remainder, $7.0 billion (16% of the overall budget and 45% of the discretionary component), was for global HIV/AIDS efforts.

The Domestic HIV Budget

The domestic HIV budget includes funding for care, cash/housing assistance, prevention, and research as follows:

Care

The largest component of the federal HIV budget is health care services and treatment for people living with HIV in the U.S., which totaled $28.7 billion in FY 2022 (67% of the total HIV budget and 80% of the domestic share). This represents a 31% increase over the FY 2018 level, primarily due to increased mandatory spending for Medicaid and Medicare. (Medicare and Medicaid spending includes all care for people with HIV, not just HIV related services.) Medicaid is the largest federal funder of HIV care and treatment, followed by Medicare. States also pay a state share of Medicaid funding, including for HIV care, but those amounts are not included in this analysis. The Ryan White HIV/AIDS Program, the largest HIV-specific discretionary grant program in the U.S. and third largest source of federal funding for HIV care (behind Medicaid and Medicare), was funded at $2.5 billion, representing an 8% increase over FY 2018 level. This increase was due to the launch of the Ending the HIV Epidemic initiative, which included new funding for Ryan White and other domestic HIV programs. Ryan White’s AIDS Drug Assistance Program (ADAP), which provides HIV-related medications and insurance coverage to people with HIV, was flat funded in FY 2022 at $900.3 million.

Cash/Housing Assistance

$3.3 billion of the FY 2022 budget for HIV was for cash and housing assistance in the U.S. (8% of the overall budget and 9% of the domestic budget), a 12% increase over the FY 2018 level of $3 billion. This includes mandatory spending estimates for SSI and SSDI, which provide cash assistance to disabled and older individuals with HIV. Housing assistance, through the Housing Opportunities for Persons with AIDS Program (HOPWA), is discretionary and received $450 million in FY 2022, a $75 million (20%) increase over the FY 2018 level.

Prevention

The smallest category of the federal HIV budget is domestic HIV prevention, which totaled $1.1 billion in FY 2022 (about 3% of the overall HIV budget). This includes funding for domestic HIV prevention across multiple agencies, representing a 21% ($184 million) increase over the FY 2018 level. Most prevention funding is provided to the CDC’s National Center for HIV/AIDS, Viral Hepatitis, STD, and TB Prevention (NCHHSTP), which received $987 million in FY 2022, an increase of $201 million over the FY 2018 level. Funding increases for domestic HIV prevention were largely attributed to the EHE Initiative (which included $195 million for CDC in FY 2022).

Research

$2.7 billion (6% of the overall FY 2022 amount and 7% of the domestic budget) in the FY 2022 HIV budget is for domestic HIV research across multiple agencies, slightly higher than the FY 2018 level ($2.6 billion). The National Institutes of Health (NIH), which carries out almost all HIV research, receives $2.6 billion in FY 2022 for domestic HIV research activities (additional amounts used for international HIV research are attributed to the global category, discussed below), slightly higher than in FY 2018 ($2.4 billion).¹ 

The Global HIV Budget

The U.S. government first provided funding to address the global HIV epidemic in 1986. Total funding has increased significantly over time, particularly since the launch of the President’s Emergency Plan for AIDS Relief (PEPFAR) in 2003. However, since 2010, funding for global HIV efforts through regular appropriations has remained relatively flat.²  Most U.S. funding for global HIV is considered to be part of PEPFAR, including both bilateral HIV efforts (country-to-country funding) as well as contributions to multilateral organizations, including the Global Fund to Fight AIDS, Tuberculosis and Malaria (Global Fund) and the Joint United Nations Programme on HIV/AIDS (UNAIDS).³ 

The FY 2022 budget for HIV included $7 billion for the global epidemic – $5.4 billion for bilateral programs, $1.6 billion for the U.S. contribution to the Global Fund, and $50 million for UNAIDS. Global HIV funding amounts to 16% of the overall FY 2022 HIV budget and 45% of discretionary funding. As noted above, funding for global HIV efforts has been relatively flat for over a decade.⁴ 

Bilateral Funding

• Most bilateral HIV funding is channeled to the State Department which received $4.34 billion in FY 2022, a $65 million (2%) increase compared to the FY 2018 level ($4.28 billion), but still $226 million below its peak funding level in FY 2010 ($4.57 billion).
• HIV funding through USAID ($330 million) and CDC ($128.9 million) was flat in FY 2022 compared to the FY 2018 level. Funding for international HIV research activities at NIH was $628.14 million in FY 2022, $63 million above the FY 2018 level.

Multilateral Funding

• Almost all multilateral funding for HIV is provided to the Global Fund, an independent, public-private, multilateral institution which finances HIV, TB, and malaria programs in low- and middle-income countries, and to which the U.S. is its largest contributor. In FY 2022, funding was $1.56 billion for the Global Fund.⁵  The FY 2022 budget for the Global Fund increased by $210 million (16%) compared to FY 2018.
• In FY 2022, funding for UNAIDS, the U.N. system’s coordinating body that serves to help galvanize worldwide attention to AIDS, was $50 million, $5 million (11%) above the FY 2018 level.

Appendix A

1. The NIH does not define HIV research as “domestic” given its broad application. However, for purposes of this analysis, all HIV research funding not designated as “global” is categorized as domestic. ↩︎
2. In FY 2021, Congress provided an additional $3.8 billion in emergency supplemental funding ($250 million for bilateral HIV and $3.5 billion for the Global Fund) to address the global COVID-19 epidemic. These amounts are not included in the figure and table totals. ↩︎
3. In addition, international HIV research activities are supported by the NIH Office of AIDS Research (OAR) through its annual appropriated budget, but these amounts are not considered part of PEPFAR. ↩︎
4. In addition to regular appropriations for global HIV efforts, in FY 2021, in response to the COVID-19 pandemic, Congress appropriated an additional $3.8 billion in emergency supplemental funding, including $250 million for bilateral HIV and $3.5 billion for the Global Fund, to address COVID-19. See, KFF analysis of data from the “American Rescue Plan Act of 2021” (P.L. 117-2). ↩︎
5. Global Fund grants support country projects to fight HIV, tuberculosis, and malaria. Figures used here are not adjusted to represent an estimated “HIV share.” ↩︎

A KFF analysis shows that gross total Medicare spending on Ozempic and other similar drugs has increased dramatically in recent years – even though Medicare is explicitly prohibited by law from covering the drugs for obesity.

That’s because Medicare now covers the drugs, known as GLP-1s, for other medically accepted indications, including to treat diabetes. This week the Centers for Medicare & Medicaid Services (CMS) informed Medicare drug plans that they can cover Wegovy, another drug in this class, for its newly approved use of preventing heart attacks and strokes for people who are obese or overweight.

In 2022, Medicare gross total spending reached $5.7 billion on Ozempic (semaglutide), Rybelsus (semaglutide), and Mounjaro (tirzepatide), all of which it covered for diabetes that year, according to just-released Medicare drug spending data. That was up from $57 million in 2018. (Gross spending does not account for any rebates paid by drug manufacturers to pharmacy benefit managers, which would result in lower net Medicare spending.)

Gross spending on Ozempic alone increased from $2.6 billion in 2021 to $4.6 billion in 2022, pushing it to 6th place among the top-selling drugs in Medicare Part D that year, up from 10th place the year before.

The fact that covering GLP-1s under Medicare Part D for authorized uses is already making a mark on total Part D program spending could be a sign of even higher spending to come as Part D plans are now able to cover Wegovy for its heart health benefits, and if new uses for GLP-1s are approved.

These drugs offer substantial potential health benefits, but the combination of intense demand, new uses, and high prices for these treatments is likely to place tremendous pressure on Medicare spending, Part D plan costs, and premiums for Part D coverage.

This post was updated on March 27, 2024 to include a clarification of the drugs included in the analysis and additional information about rebates.

GLP-1 drugs such as Ozempic, Wegovy, and Mounjaro were initially developed to treat type 2 diabetes, but their effectiveness as anti-obesity medications has generated tremendous excitement and high demand among people who have struggled to lose weight by other means. These drugs are also being tested to treat other conditions, and the FDA has just approved a new use for Wegovy to reduce the risk of adverse cardiovascular events. But the annual cost of these drugs in the US – upwards of $11,000 at recent list prices, though net prices may be lower with rebates negotiated by pharmacy benefit managers – has raised concerns about the fiscal impact of broad coverage of GLP-1 drugs on Medicare, other health insurers, and patients.

Medicare is prohibited under current law from covering drugs used for weight loss, but Medicare Part D plans can cover GLP-1s for their other medically-accepted indications, including to treat diabetes, and now to cut cardiovascular risk based on a recent memo from the Centers for Medicare & Medicaid Services (CMS). While the potential cost of authorizing Medicare coverage of anti-obesity drugs has presented a barrier to enacting legislation to lift the prohibition, covering these drugs under Medicare for authorized uses has already catapulted these drugs to rank among the top-selling drugs covered by Part D, Medicare’s outpatient drug benefit program.

KFF’s analysis of newly released Medicare Part D spending data from CMS shows that total gross Medicare spending on the three newest versions of these diabetes medications that have also been recently approved for weight loss – Ozempic, Rybelsus, and Mounjaro – has skyrocketed in recent years, rising from $57 million in 2018 to $5.7 billion in 2022 (Figure 1). (Gross spending does not account for rebates that result in lower net spending.) Ozempic (semaglutide injection) was approved in December 2017; Rybelsus (semaglutide tablets) was approved in September 2019; and Mounjaro (tirzepatide) was approved in May 2022. As weight loss drugs, semaglutide was approved as Wegovy in 2021 and tirzepatide was approved as Zepbound in 2023. (This analysis does not include all GLP-1s covered by Medicare, only those products with more recent FDA approvals that are also approved as weight loss medications.)

Spending on Ozempic alone increased substantially between 2021 and 2022. Ozempic rose from a 10^th place ranking among the 10 top-selling Part D drugs in 2021, with gross spending of $2.6 billion, to 6^th place in 2022, with spending of $4.6 billion (Figure 2). In total, gross spending under Medicare Part D was $240 billion in 2022; Ozempic accounted for 2% of this amount. This is before taking into account rebates, which Medicare’s actuaries estimated to be 31.5% overall in 2022 but could be as high as 69% for Ozempic, according to one estimate.

Given the relatively high level of gross Medicare Part D spending as of 2022 for the two semaglutide products combined, Ozempic and Rybelsus, it’s possible that Medicare could select this product for drug price negotiation as early as 2025, which would be just over seven years past its earliest FDA approval in late 2017. (For small-molecule drugs like semaglutide, at least seven years must have passed from its FDA approval date to be eligible for selection, and for drugs with multiple FDA approvals, CMS will use the earliest approval date to make this determination.) If that happens, a negotiated Medicare price would be available beginning in 2027. This could lower total Medicare spending on semaglutide products, including Ozempic, Rybelsus, and Wegovy.

The fact that covering GLP-1s under Medicare Part D for authorized uses is already making a mark on total Part D program spending could be a sign of even higher spending to come as Part D plans are now able to cover Wegovy for its heart health benefits, as other uses for GLP-1s are approved, and as policymakers consider legislation that would authorize Medicare to cover obesity drugs. Competition among GLP-1 drugs could have a moderating effect on launch prices and lead to higher rebates negotiated between manufacturers and pharmacy benefit managers. These drugs offer substantial potential health benefits, but the combination of intense demand, new uses, and high prices for these treatments is likely to place tremendous pressure on Medicare spending, Part D plan costs, and premiums for Part D coverage.

Hospitals account for 30% of total health care spending—$1.4 trillion in 2022—with expenditures projected to rise rapidly through 2031, contributing to higher costs for families, employers, Medicare, Medicaid, and other public payers. As policymakers consider a variety of strategies to make health care more affordable, there is growing interest in understanding the factors that drive hospital and health system spending. Some policymakers at the federal and state level are pursuing strategies to reduce the burden of hospital costs, including efforts to establish site-neutral payments, limit the prices that hospitals may charge commercial insurers relative to Medicare rates, promote greater competition in hospital markets, and introduce standards for hospital debt collection practices and charity care programs.

This issue brief describes gaps in data about hospital and health system finances and business practices that limit transparency for policymakers, researchers, and consumers. Each section discusses the main sources of data that are available, reviews the strengths and weaknesses of each, and identifies gaps in these data. The following list includes examples of basic questions about hospitals that cannot be fully answered, either because the data do not exist; are not collected in a single, comprehensive source; or have important limitations:

• Which hospitals and health systems are in the greatest need of government support based on profitability, days cash on hand, payer mix, and other factors? A number of existing sources provide some level of information about these indicators, but each has its own limitations. For example, it can be difficult to accurately calculate measures of profitability from Medicare cost report data and compare them across hospitals due to missing or unstandardized details (see Table 1 for specifics). Medicare cost reports also do not include data about the health system that owns a given hospital—so may be missing information necessary to calculate days cash on hand—and they cannot be used to identify the extent to which a hospital treats commercial or uninsured patients. Finally, as a result of lags in reporting, most data may not be timely enough to address urgent policy questions, such as which hospitals need an infusion of funds following unexpected crises (e.g., following a cyberattack on billing systems or a public health crisis).
• Which hospitals and health systems engage in aggressive debt collection practices (such as suing patients), how often do they do so, and what are the characteristics of the patients who are targeted by these actions (such as their race and ethnicity and whether they reside in urban or rural areas)? Neither Medicare cost reports nor IRS Form 990s—the main public sources of data on hospital and health system finances—provide data to answer these questions, nor does any other known source.
• What are the characteristics of hospitals and health systems that deny a large share of charity care applications or take a long time to approve eligible patients for assistance? What are the characteristics of patients who received or were denied charity care? Neither Medicare cost reports nor IRS Form 990s provide data to answer these questions, nor does any other known source. Medicare cost reports now collect data about the number of patients who receive charity care but not about their characteristics, the number of application denials, the reasons for denials, or review times.
• Which hospitals and health systems charge the most or least for a defined set of services in a given region? Recent federal rules require hospitals and payers to disclose the prices negotiated with commercial plans, among other things, but researchers have documented a number of limitations to these data, making it difficult to make apples to apples comparisons across providers. Researchers also use claims data to compare provider prices, but there is no source that includes claims from all payers (such as a federal all-payer claims database).
• Which health systems have acquired the most physician practices in recent years? A number of data sources provide some level of information about ownership and consolidation, but none provide a comprehensive record of ownership and consolidation across the health system. For example, merging providers must report their plans in advance to the FTC and DOJ in certain cases where the transaction exceeds a specified value ($119.5 million in 2024), but most acquisitions of physician practices or groups fall below this threshold.
• What are the characteristics of 340B hospitals that benefit the most and least from the 340B program? We are unaware of any comprehensive, publicly-available dataset that documents how much each 340B hospital benefits from the program, such as the estimated savings relative to what the provider would have otherwise paid for 340B drugs.

Each of the sections below provides examples of options that could be considered to fill data gaps and improve transparency, such as by adding new reporting requirements to Medicare cost reports. Requiring hospitals and health systems to provide additional information would help strengthen the capacity of policymakers to target funds more efficiently and conduct oversight, but would also create new administrative burdens for providers, some of which are facing financial challenges. Whether or not to beef up data reporting related to hospital and health system finances, charity care, and other policy issues will depend on how policymakers weigh the value of greater transparency against the potential costs imposed on providers, as well as on the government and other payers, as applicable.

Data Gaps

There is no comprehensive, accurate, and readily accessible source of information that can be used to address basic questions about the financial health or distress of hospitals and health systems

Accurate, timely, and comprehensive information about the finances of hospitals and health systems—such as whether they are profitable, the extent to which they have the capacity to cover losses with existing financial reserves in an emergency, and how burdened they are with debt—is lacking. Such information would give policymakers additional tools to modify payment policy and conduct regulatory oversight. For instance, these data could help policymakers better determine the adequacy of Medicare and Medicaid reimbursements, identify hospitals that are financially vulnerable that may require additional government support to maintain services needed in their communities, assess the extent to which nonprofit hospitals reinvest earnings into their communities, and predict how payment reforms are likely to impact hospitals’ financial standing. One recent example is that better and more current financial data could have helped policymakers target COVID-19 dollars to, say, hospitals and health systems with limited liquidity heading into the pandemic that may have been especially strained during that period.

A number of existing sources provide some level of information about the finances of hospitals and health systems across the country, including their revenues, expenses, assets, and liabilities (see Table 1 for additional details about the benefits and limitations of each dataset; the following discussion excludes state-specific datasets).

• Medicare cost reports. Hospitals participating in Medicare are required to submit an annual cost report with information about their costs and other key financial information. The Medicare cost reports include data for virtually all (98%) of community hospitals in 2022 based on KFF estimates¹  and provide useful and relatively standardized information about hospital expenses. However, other financial information is less detailed or standardized, which can make it difficult to accurately calculate key measures, like profit margins, and compare them across hospitals (see Table 1). Medicare cost reports are also not subject to the same rigorous auditing process as are audited financial statements (see below). Further, because the data are submitted by individual hospitals, they do not reflect the finances of the health systems that own them (such as their financial reserves, days cash on hand, the amount of debt held by the system, or the financial impact of owning non-hospital entities such as insurance companies and physician practices). Cost report data are generally lagged: as of early March 2024, data were available online for all or nearly all reporting entities through fiscal year 2022 but were usually not available for fiscal year 2023. This means that the most recent year of complete or nearly complete data was typically 14 to 20 months old as of early March 2024 (the range of time reflects the difference in fiscal year reporting periods).
• IRS Form 990. Tax-exempt, nonprofit hospitals and health systems are required to file a Form 990 return annually with the Internal Revenue Service (IRS), which includes financial information—such as measures relating to profitability and financial reserves—along with other information, including CEO compensation and community benefits spending. However, among other limitations, financial information from IRS Form 990s are also not subject to the same rigorous auditing process as audited financial statements and do not include government and for-profit hospitals and health systems. Nonprofit health systems do not typically break out information for individual hospitals, and they may provide information through multiple reports that would need to be combined to evaluate the overall health system. As of early March 2024, IRS Form 990 data were available online in a machine-readable form for all or nearly reporting entities for fiscal year 2021 but were unavailable for most entities for fiscal year 2022.
• Audited financial statements. Many hospitals and health systems publicly release annual audited financial statements, which is a requirement for publicly-traded, for-profit health systems and systems which issue publicly-traded debt. Audited financial statements are considered the gold standard of financial data and can be used to calculate standardized versions of several common financial measures, such as profitability, days cash on hand, and debt burden. However, these data are not easily accessible (e.g., in a machine-readable file), and they typically require laborious, specialized expertise to standardize financial information across systems. Further, audited financial statements often do not break out information about individual hospitals in the common scenario where facilities are part of a broader health system. Although hospital-level data is currently captured for almost all hospitals in the cost reports, there is no data source that contains all system-level data. Based on our experience, audited financial statements tend to be released from two to six months after the end of a given fiscal year, meaning that, as of early March 2024, data were likely available for all or nearly all entities that publish these statements through fiscal year 2022 and were available for many, but not all, through fiscal year 2023.
• Credit rating agency data. Credit rating agencies collect and standardize information from audited financial statements for hospitals and health systems that apply for a credit rating. These data might be available for purchase. However, they cover only a subset of entities and are unlikely to be representative of all hospitals and health systems. These data are available after the release of the underlying audited financial statements.
• Data from third-party financial platforms. Data entered by hospitals into financial management platforms might be purchased from firms that sell this software. These data tend to be the timeliest of all sources, e.g., with monthly data available in the following month. However, the timeliness of these data comes with a tradeoff, as monthly data incorporate estimates that are corrected over time and are therefore less accurate than annual data. Further, these data are generated from a subset of hospitals which may not be representative. These data are likely shared at an aggregated level to protect the identity of individual hospitals.

Financial data entail tradeoffs between accuracy and timeliness. For example, audited financial statements are the most accurate data but they are often lagged by several months and reflect annual data, while data from third-party financial platforms are typically quite timely and reflect monthly financial data, but may be less accurate because they rely in part on estimates and are not audited. As a result, it can be challenging to address urgent policy questions, such as which hospitals need an infusion of funds following unexpected crises (e.g., following a cyberattack on billing systems or a public health crisis) with available data, since each source has problems with either timeliness or accuracy.

Among other data gaps, we are unaware of any public data with comprehensive and consistently-defined information on payer mix—i.e., the share of business that comes from different payers, including Medicare, Medicaid, commercial insurers, the uninsured, and others—that covers all hospitals and health systems in the country. For example, while cost report data include information about Medicare and Medicaid charges, revenues (actual payments), and inpatient days and discharges, they do not identify these amounts for commercial patients and the uninsured.

Further, although more than half of eligible Medicare beneficiaries were enrolled in Medicare Advantage in 2023, cost reports do not separately identify Medicare Advantage revenues and charges, though they do so for Medicare Advantage inpatient days and discharges. Payer mix, including all major payer categories, would help to assess the financial position of a hospital or health system, given that commercial plans tend to reimburse at higher rates than Medicare and Medicaid. Payer mix data could also help to identify and target support to safety-net hospitals.

Key Questions That Cannot Be Fully Answered:

• Which hospitals and health systems are in the greatest need of government support based on profitability, days cash on hand, payer mix, and other factors?
• How profitable were hospitals in the past year and why?
• Which hospitals or health systems are well-positioned to weather unforeseeable fiscal challenges, such as a pandemic?
• How much revenue do hospitals receive from Medicare Advantage patients, and how does the share of revenue attributable to Medicare Advantage patients vary across hospitals?

Options to Fill Gaps in Data and Improve Transparency

Federal policymakers could create a national database with information from all hospitals and health systems that receive any payments from the federal government, with standardized, system-level financial data. To do so, the government could provide hospitals and health systems with financial reports to complete, with detailed templates and instructions describing how to pull information from audited financial statements and other sources. Hospitals and health systems could be required to submit these reports on a timely basis and to provide similar reports based on unaudited quarterly financial statements to provide preliminary information about recent trends. Policymakers could also decide whether to require health systems to report facility-level information for member hospitals.

Alternatively, policymakers could implement narrower changes, such as by modifying Medicare cost reports to collect additional or more precise information about common financial measures. For example:

• Total margins. Hospitals could be required to separate out changes in the value of stock portfolios and other investments (also known as “unrealized investment gains and losses”) from reported revenues, if they are not doing so already, which can have a large effect on reported profits. Hospitals could also be required to separately report nonrecurring income, such as from the sale of assets, which could provide a deeper understanding of changes in profitability.
• Operating margins. Hospitals could be required to directly report total operating revenues, which include both patient-related and other sources of revenue, such as from gift shops, parking, and cafeterias. Currently, operating margins must be approximated by subtracting out nonoperating revenues, such as investment income, from total revenues. This calculation is not straightforward because nonoperating sources of income are not fully separated from broader revenue categories.
• Payer mix. Policymakers could require hospitals to report charges, revenues, and inpatient days and discharges for each major payer—including for commercial, uninsured, and Medicare Advantage patients—to better assess the financial status of hospitals and targets policies and funds efficiently. Given that outpatient services account for a large share of hospital revenues, the charge and revenue amounts could be broken out by inpatient and outpatient services.

Other changes to Medicare cost reports could include collecting quarterly data for a set of key financial measures (such as those needed to calculate profitability and payer mix), as California does, or collecting a subset of system-level measures (such as days of cash on hand) that might alternatively be reported through the national database mentioned above.

Little is known about hospital and health system debt collection practices

About four in ten adults (41%)—and about six in ten (57%) of those with household incomes below $40,000—reported some level of health care debt in a KFF 2022 survey, and a large share of those who reported health care debt cited costs associated with hospitalizations (35%) and emergency care (50%) as sources of unpaid bills. According to KFF Health News, many hospitals engage in aggressive collection practices that can have significant financial consequences for patients, such as suing patients to garnish their wages, placing a lien on their home, reporting a patient’s debt to consumer credit bureaus, and selling their debt to a collection agency (which may in turn take aggressive steps to obtain payment). Hospitals may also encourage patients to enroll in payment plans with high interest rates and deny care to patients with unpaid bills, according to press reports.

However, very little systematic information is available to document the debt collection practices of hospitals and health systems across the country. As part of their annual IRS Form 990 returns, nonprofit hospitals and health systems are required to disclose if they ever engage in certain extraordinary debt collection practices before trying to determine whether a given patient is eligible for charity care, but they do not report whether they engage in these activities more generally or how often they do so. In April 2022, the Biden administration announced that it would gather information from more than 2,000 providers about their “medical bill collection practices, lawsuits against patients, financial assistance, financial product offerings, and 3^rd party contracting [and] debt buying practices.” However, it is not clear which providers will be included or when the findings will be published.

Consumer credit bureaus are another source of information about patient debt, but they only include medical debt that has been reported to these firms, and it may be difficult or impossible to comprehensively trace these data back to specific hospitals or health systems. Finally, some private firms offer software to help providers track billing and collections and, in the process, they may collect data from many hospitals. However, these data only include a subset of facilities, and it is also unlikely that firms would disclose information about any specific client.

Ultimately, little is known about the debt collection practices of hospitals and the medical debt carried by their patients. For example, we are unaware of any comprehensive dataset that identifies, for a given hospital, the number of bills and amount being collected, how much it collects from patients with medical debt, whether it engages in aggressive debt collection practices (such as suing patients), how often it does so, the characteristics of patients who incur medical debt or are affected by aggressive debt collection practices, which collection agency it has a relationship with, how much medical debt it sells to collection agencies, or the amount paid for this debt.

Key Questions That Cannot Be Fully Answered:

• Which hospitals and health systems engage in aggressive debt collection practices (such as suing patients), how often do they do so, and what are the characteristics of the patients who are targeted by these actions (such as their race and ethnicity and whether they reside in urban or rural areas)?
• How much medical debt have patients incurred from specific hospitals and health systems and what are the characteristics of these patients?
• How much medical debt do hospitals report to credit bureaus?
• How much do hospitals collect when using extraordinary debt collection actions, like litigation?

Options to Fill Gaps in Data and Improve Transparency

Policymakers could require hospitals to report and publish additional information about debt collection practices, such as the number of large, unpaid medical bills a hospital is actively trying to collect; the number and type of lawsuits brought against patients; and the number of patients referred to collection agencies (as Colorado requires). Policymakers could also require hospitals to report the characteristics of patients with debt and who are subject to aggressive collection efforts, to the extent such data are available.

It’s unclear how much help hospital charity care programs provide to patients who have difficulty affording their care

Hospital charity care programs—also known as “financial assistance programs”—provide free or discounted services to eligible patients who are unable to afford their care. These programs may be available to uninsured patients, as well as insured patients, whose plans may have large cost-sharing requirements. Hospital charity care programs vary in their eligibility criteria and application procedures. Reporting from KFF Health News indicates that some patients have fallen through the cracks, i.e., were likely eligible for assistance but did not receive it. Improved data collection would allow policymakers and regulators to monitor how charity care programs are working overall and among nonprofit hospitals and health systems, which are expected to provide benefits to the communities they serve in exchange for their tax-exempt status.

Existing data provide some information about eligibility criteria for charity care programs operated by hospitals and health systems and the amount of assistance provided. Nonprofit hospitals and health systems are required to report some eligibility criteria for charity care programs (such as income eligibility thresholds) and aggregate charity care costs as part of their annual IRS Form 990 filings. In addition, all hospitals participating in Medicare—nonprofit, for-profit, and government hospitals—must report charity care charges as part of their annual Medicare cost reports (and convert those charges to costs).

Further, based on recent changes to the cost reports, hospitals must also report information about charity care by patient, such as the patient’s insurance coverage, the amounts paid by the patient and their insurer, and the amounts written off as charity care, uninsured discounts, and bad debt. These data are required beginning with cost report periods starting in October 2022, and all or nearly all hospitals will be reporting these data for the first time in 2024 or 2025, although it’s unclear how much of this data will become public. Finally, as noted in the section above, some private firms may have provider data on billing and collections, including charity care amounts, but only for a subset of hospitals, and it is also unlikely that firms would disclose information about any specific client.

Nevertheless, gaps in data limit the ability of policymakers and researchers to assess how charity care programs work. First, little is known about the eligibility criteria or application procedures for charity care programs operated by for-profit and government hospitals, which account for 42% of all community hospitals but are not required to file the IRS Form 990. Second, while the IRS Form 990 collects information about eligibility criteria from nonprofit entities, they do not collect information that describes if and how hospitals screen patients for eligibility, what documents patients must submit to apply, and which services are covered, among other things. Third, the federal government does not collect data on the number of applications received by a given hospital or their outcomes, such as processing times, the share approved, reasons for denials, and the share of denials that are appealed. Fourth, while hospital cost reports must now include the number of patients that receive charity care and the level of assistance they receive, it is unclear how much of this information will be disclosed to the public. Fifth, the federal government does not collect information about charity care by patient characteristics to assess, for example, whether patients in urban areas are more or less likely than patients in rural areas to receive charity care. Finally, while data are available on the cost of charity care programs, it is ultimately unclear what share of low-income patients are eligible, let alone what share of eligible patients end up benefiting from these programs.

Key Questions That Cannot Be Fully Answered:

• What are the characteristics of hospitals and health systems that deny a large share of charity care applications or take a long time to approve eligible patients for assistance?
• What are the characteristics of patients who received or were denied charity care?
• Which hospitals have more or less generous charity care programs?
• What share of patients from low-income areas receive charity care?

Options to Fill Gaps in Data and Improve Transparency

The federal government or states could collect additional information about how charity care programs work, such as eligibility criteria and application procedures from for-profit and government hospitals and health systems, additional information about eligibility criteria and application procedures from nonprofit hospitals and health systems, data about the number of applications and their outcomes (such as the share denied or appealed), and specific information about how charity care application outcomes and costs vary by patient characteristics (as implemented by Oregon). Policymakers could also disclose new cost report data on charity care, such as the amount billed to patients after charity care discounts.

Information about hospital and other health care prices remains elusive, despite recent federal transparency rules

Policymakers continue to express interest in increasing transparency into the cost of health care services provided by hospitals and other health care providers. While the extent to which this could lead to lower costs is debated, greater price transparency could in principle do so, for example, by helping patients with commercial insurance select more affordable providers, allowing self-insured employers to design plan benefits that encourage the use of less expensive providers, facilitating government oversight, and informing policy interventions.

Recent federal rules have required hospitals and payers to disclose the prices charged for health care services, including commercially negotiated prices. Under the Hospital Price Transparency rule, as of 2021, hospitals must generally: (1) disclose certain price data—including payer-specific rates—for each item and service and (2) provide similar information for 300 shoppable services in a consumer-friendly format. Under the Transparency in Coverage rule, which gradually introduced new requirements beginning in 2022, all individual and group health plans that were not grandfathered under the Affordable Care Act (and issuers that offer these plans) must: (1) disclose rates for every covered item and service for every in-network provider (including hospitals and others entities), (2) report plan allowed amounts and provider charges for out-of-network providers, and (3) create a price comparison tool that provides estimated cost-sharing requirements for a given provider and item or service.

The federal rules have led to the publication of a large volume of information about prices, but there are obstacles to using data on prices alone to compare the cost of care across different providers. First, health care is often delivered as a bundle of services for an episode of care, and these services are frequently billed separately. The price for a particular item, such as a blood test, does not necessarily reveal the expected cost of the entire episode. Second, in contrast to Medicare, billing codes for commercial payers cannot typically be applied in consistent ways to describe the cost of care for comparable services for comparable patients across different providers. Some commercial contracts might use common billing codes, such as MS-DRGs, but the payment structure for a given code may vary substantially across payers and providers. For example, a commercial payer may reimburse a hospital for a given MS-DRG based on a fixed rate, the length of a hospitalization, or a discount on the hospital’s charge, and they may adjust these amounts based on patient characteristics (e.g., health status) or for various value-based initiatives. Other commercial contracts may include unique codes (e.g., describing a bundle of care that is only used by a given payer or provider).

Additional issues have emerged now that the data are available. One is that hospitals and health plans sometimes report prices that are implausibly high or low for a given service, such as rates that are under a few hundred dollars for a hip and knee replacement in some instances and over $1,000,000 in others according to a KFF analysis of the hospital data. In other cases, there are multiple prices for the same provider, procedure, and plan, with no way to easily distinguish which would be applicable for a patient covered by the plan. Another issue is that health plans often report prices for services that would likely never be offered by a given provider, such as the rate for a dermatologist to provide cardiology services. This can occur, for example, when a physician agrees to a broad plan fee schedule that details reimbursement for many other types of providers and services. There are also concerns that the rules do not require certain information that is important for interpreting or comparing prices, such as how often a given price is charged or standardized details necessary to understand the payment structure for a given payer and provider. Revisions to the federal rules taking effect in mid-2024 and in 2025 will require disclosure of more information about different factors affecting negotiated rates, but it is likely that some gaps will remain. Finally, the massive size of the data files, particularly the health plan files, make them very difficult and costly to analyze.

Claims data from commercial insurers may address some of the issues with the price transparency files but have their own set of limitations. Claims data include information about prices, as well as volume and the actual amount spent. The latter would facilitate comparisons of costs for, say, a given MS-DRG, irrespective of differences in payment structure across payers and providers. Claims data are available from a variety of sources, such as private vendors, health plans and self-funded employers themselves, and state all-payer claims databases (APCDs). However, each of these datasets includes only a subset of payers, and the owners of some of these datasets prohibit the disclosure of prices for a given provider. State APCDs have received interest as a tool for increasing transparency around prices and other aspects of health care, but less than half of states currently have ACPDs and states are not allowed to require participation of self-funded employers, which are a significant portion of the commercial market. Some design decisions, such as the omission of health plan identifiers, have limited the usefulness of APCDs for provider price comparisons. Finally, claims data in general are subject to privacy protections for individual patients, which requires masking identifiable information, and they may include data errors. For example, some billing codes, such as MS-DRGs, may be applied after the fact to facilitate comparisons across plans and providers, but this process can be subject to error.

Key Questions That Cannot Be Fully Answered:

• Which hospitals charge the most or least for a defined set of services in a given region?
• Which health plans are paying the highest and lowest prices for a given service in a given region?
• How much should a patient expect to pay for a given service or episode of care from a given provider, and how does that vary across plans?

Options to Fill Gaps in Data and Improve Transparency

Since the initial rollout of the price transparency regulations, policymakers at the state and federal levels have been acting and exploring additional ways to increase standardization and strengthen enforcement. However, without greater standardization in rules pertaining to payment structures themselves (e.g., requiring payments based on MS-DRGs), there may always be some amount of variability in how payments work in the real world that is not captured in standardized reporting forms. Differences in payment structures across commercial contracts are likely to limit the extent to which costs can be compared using price data alone.

Another option to increase transparency would be to create a national database of claims collected from all payers (i.e., a federal APCD)—which could be a large and complex undertaking—or take more incremental steps towards increasing the accessibility of claims data. However, an APCD would have its own set of benefits and limitations, as discussed above. For example, these data may facilitate comparisons across plans and providers based on the actual amount spent, but some data may need to be masked due to privacy protections, and APCDs may contain errors.

There is no single, complete source of information about provider ownership or consolidation, which can have implications for the cost and quality of health care

Identifying who owns which providers is important for monitoring and regulating health care markets, scrutinizing provider incentives, and establishing policies to protect consumers and other payers from excessive price hikes or quality concerns. A substantial body of evidence shows that consolidation has led to higher prices without clear evidence of improvements in quality, which has garnered the attention of policymakers at the federal and state level. Tracking consolidation and market concentration requires timely and comprehensive information about changes in ownership over time. Some policymakers are also eager to track the role of private equity in health care markets which, according to one literature review, has often been associated with higher costs and mixed or negative quality outcomes.

A number of existing sources provide some level of information about ownership and consolidation for providers across the country.

• Provider Enrollment, Chain, and Ownership System (PECOS) data. The federal government requires all Medicare providers to identify ownership through PECOS, the administrative database used to manage provider enrollment in Medicare. The government recently began to release PECOS data on the ownership of hospitals, skilled nursing facilities, home health agencies, hospices, federally qualified health centers, and rural health clinics and changes in ownership among hospitals and skilled nursing facilities. PECOS includes a large amount of information and is relatively timely, as providers are required to report changes in ownership within 30 days. Researchers consider PECOS to be a key source for identifying ownership relationships among providers. However, it was not intended to serve as a national database for ownership and consolidation, and there are some potential issues with these data. For example, reports from the Health and Human Services Office of Inspector General in 2013 and 2016 identified inaccurate information or information that was inconsistent with other sources in the majority of PECOS records evaluated. MedPAC and others have also found more specifically that relying on PECOS was not effective for identifying private equity ownership.CMS recently began to require that all institutional providers, such as hospitals, flag whether an owner or managing entity reported through PECOS is a private equity company or real estate investment trust. It also required nursing facilities participating in either Medicare or Medicaid to provide more complete information about their ownership and management—such as by disclosing entities that provide administrative or clinical consulting services or that exercise financial control—which will provide further transparency around private equity.
• IRS Form 990. Tax-exempt, nonprofit entities are required to list the hospitals that they operate and to identify and report information about related entities, such as parent or subsidiary organizations, as part of their Form 990 returns. Researchers have used these data to fill in some of the gaps in PECOS data, though they are not available for government or for-profit entities.
• Data from private vendors. Data on mergers and acquisitions, ownership of physician practices, and system affiliation of hospitals can be purchased from private data vendors such as IQVIA, PitchBook, Levin Associates, and the American Hospital Association. Vendors typically pull these data from surveys, corporate directories, news reports and press releases, and/or primary research. It is likely that these data are incomplete—e.g., given that they rely on public information and whatever information providers are willing to share—though it is difficult to determine how much of the market they are missing.
• Hart-Scott-Rodino filings. Merging providers must report their plans in advance to the FTC and DOJ in certain cases where the transaction exceeds a specified value ($119.5 million in 2024). The government does not appear to generally disclose individual mergers to the public. Further, many provider mergers fall below reporting thresholds, including most acquisitions of physician practices or groups and, according to one preliminary analysis, more than 30% of hospital mergers.

Researchers have attempted to create a more complete picture of ownership relationships and merger activity by cobbling together information from a variety of sources, such as from PECOS, private vendors, and manual web searches. Combining data on providers across datasets can be difficult, as these sources sometimes contain different provider identifiers, in which case they must be combined using inexact matching approaches. Given the limitations of each of these sources and the challenges in combining them, even an exhaustive effort constructed from these various sources is unlikely to produce a comprehensive record of provider ownership and consolidation across the US health system.

Finally, most existing data, including PECOS, focus on ownership and management relationships. As a result, they are not able to track other provider relationships, such as the growth of “clinically integrated networks,” which entail contractual relationships between independent provider entities (like hospitals and physician groups) and may also have important implications for health care.

Key Questions That Cannot Be Fully Answered:

• Which health systems have acquired the most physician practices in recent years?
• Which types of physician specialties appear to be most attractive to hospitals and health systems based on acquisitions over the past few years?
• Which regions and types of providers have private equity groups invested in most heavily in recent years?

Options to Fill Gaps in Data and Improve Transparency

To improve transparency and facilitate greater oversight, policymakers could collect and report additional and more standardized information about ownership relationships and consolidation. For example, this could entail requiring providers to report additional information to PECOS, such as if a practice was purchased by a private equity firm (as CMS has begun to do for nursing homes and, to a more limited extent, other institutional providers). PECOS could also collect additional data on provider relationships and forms of consolidation that do not entail formal ownership, such as accountable care organizations and other clinically integrated networks. Implementing a single, unique provider identifier that could be used to link providers across PECOS and other government databases could also facilitate improved transparency. Finally, policymakers could expand Hart-Scott-Rodino merger reporting requirements to encompass a broader set of mergers and acquisitions.

There is no comprehensive source of data on use of the 340B Drug Pricing Program by hospitals

The 340B Drug Pricing Program requires manufacturers participating in Medicaid to sell outpatient drugs to eligible nonprofit and government providers at a substantial discount, with the intent of supporting entities caring for low-income and other underserved populations, such as certain disproportionate share hospitals. The program has grown substantially over time, with total drug purchases more than quadrupling from $12 billion in 2015 to $54 billion in 2022. Hospitals account for the large majority of these drug purchases, and more than 2,600 hospitals participated in the program as of January 2023 (compared to all 6,120 hospitals in the US as of 2022, as reported by the American Hospital Association). Given the growth of the 340B program over time, some have questioned how well its benefits are targeted towards hospitals that serve a disproportionate share of low-income and other underserved populations.

Some information about how the 340B program operates is currently available. For example, the Health Resources and Services Administration (HRSA), which administers the 340B program, publicly discloses a list of participating entities and total 340B drug purchases by entity type. The latter is based on data from the HRSA Prime Vendor Program which, among other things, negotiates discounted 340B prices and facilitates distribution for participating 340B entities, though not all 340B drugs are purchased through this program. HRSA has access to other data that do not appear to be publicly disclosed, including ceiling prices it calculates for 340B drugs, and HRSA may be able to access the rates negotiated and volume of drugs purchased through the Prime Vendor Program.

Claims data from commercial and public payers can currently be used to approximate 340B revenues and volumes by identifying reimbursement for outpatient drugs provided by 340B entities. However, claims data do not consistently flag the specific subset of these drugs that are purchased through the 340B program, although the government requires providers to do so when submitting Medicare claims. Further, there is no comprehensive source of claims data at the national level that covers all payers and drugs where information about 340B drugs could be added.

We are not aware of data that evaluates the extent to which specific participating entities are benefiting from the 340B program, let alone whether providers that focus more on underserved patients are benefiting the most. Calculating how much money they are earning on 340B drugs net of costs would require knowing acquisition costs, reimbursement rates, and which drugs are acquired through the 340B program. It is likely that only 340B providers themselves have comprehensive data on all of these components. Identifying the benefit of the 340B program would also require estimating how much participating entities would have profited in the absence of the program (i.e., based on what they would have otherwise paid for these drugs).

Key Questions That Cannot Be Fully Answered:

• What is the total amount that participating hospitals are earning on 340B drugs net of costs?
• How much of a markup do participating providers charge for 340B drugs by payer?
• How much do participating hospitals save on 340B drugs relative to what they would have otherwise paid?
• What are the characteristics of 340B hospitals that benefit the most and least from the 340B program?
• Are 340B hospitals providing free or greatly discounted drugs to uninsured patients and others who may have difficulty affording treatments?

Options to Fill Gaps in Data and Improve Transparency

Policymakers could require providers to report the value of 340B purchases and revenues or estimated savings relative to what the provider would have otherwise paid. Some proposals have also been floated that would require providers to report how they spend profits earned on 340B drugs (such as whether they use these profits to expand financial assistance programs) and the number and type of patients that receive 340B drugs. Tracking the former may be difficult given the fungible nature of money. Policymakers could also require 340B hospitals to report whether they are providing free or greatly discounted drugs to uninsured patients and others who may have difficulty affording medications.

1. This number reflects the share of community hospitals identified in 2022 data from the AHA Annual Survey Database that could be matched to CMS hospital cost reports for periods ending in 2022. ↩︎

In advance of oral arguments about access to medication abortion before the Supreme Court on March 26, KFF examines how a Court ruling for the plaintiffs would limit access to mifepristone blocking its use in telehealth and distribution through pharmacies, including in states where abortion is legal and protected. In addition, it could potentially weaken the role of the Food and Drug Administration (FDA) in drug reviews—something the Court has never done before.

As part of its explainer, KFF describes the issues at stake in the outcome of Alliance for Hippocratic Medicine (AHM) v. Food and Drug Administration (FDA), and Danco Laboratories LLC v. AHM, and examines the lower court rulings that led to the Supreme Court taking the case, and the legal standing of the plaintiffs, who are anti-abortion organizations and doctors—and their claims. With medication abortion accounting for nearly two thirds of abortions in the U.S. and 16% of all abortions now provided through telehealth where abortion pills are mailed to the patient, the outcome of the case could limit access to medication abortion throughout the country. 

KFF also explores the potentially far-reaching implications for the Court’s ruling on the FDA’s authority to continue to regulate a wide range of drugs, including those that could be perceived to be controversial today and in the future.

Additional KFF resources about medication abortion in the United States include:

• Legal Challenges to the FDA Approval of Medication Abortion Pills, which focuses on the major claims in the AHM case prior to an April 7, 2023, ruling in the 5th Circuit Court of Appeals. 
• The Availability and Use of Medication Abortion, which overviews how medication abortion is used and regulated as well as the role of the drug in self-managed abortions. The factsheet also analyzes the intersection of federal and state regulations related to medication abortion’s provision and coverage.
• KFF Health Tracking Poll March 2024: Abortion in the 2024 Election and Beyond, which explores voters’ preferences on abortion as a key voting issue 

On March 26, 2024, the Supreme Court is scheduled to hear oral arguments in Food and Drug Administration (FDA) v. Alliance for Hippocratic Medicine (AHM), and Danco Laboratories LLC v. AHM. While the Supreme Court stated in the Dobbs decision that it “returns the issue of abortion to the people’s elected representatives,” the outcome of this case could limit access to medication abortion throughout the country, including in states where abortion is legal and protected. The interest in this case expands far beyond the issue of access to mifepristone and abortion; many people are watching whether the Court will block the FDA’s independence in determining the conditions required to assure a drug’s safe use— something the Court has never done before.

What Is the Case?

In the case, AHM v. FDA, the plaintiffs contend the FDA did not act within its authority when it approved mifepristone (one of the two drugs used in the medication abortion regimen) and also when it revised the protocol for prescribing and dispensing the medication in 2016 and 2021 (See Table 1). The plaintiffs also claim that the approval violated an 1873 anti-obscenity law, the Comstock Act, which prohibits the mailing of any medication used for abortion. The plaintiffs claim they have legal standing, arguing they are injured because they must treat patients who present to the emergency room after taking mifepristone, forcing them to divert time from their other patients and violating their conscience rights.

Danco, the manufacturer of Mifeprex, the brand name of mifepristone, has intervened in this case and is a defendant along with the FDA. The FDA and Danco claim the FDA approved changes in the Risk Evaluation and Mitigation Strategies (REMS) (special conditions FDA applies to some drugs) and other conditions for mifepristone use in 2016 after extensively reviewing the scientific evidence and 15 years of data reflecting the drug’s safety profile. Based on numerous studies, the FDA concluded mifepristone was safe to use up to 70 days gestation, misoprostol was effective and safe to use at home, and the efficacy and safety was the same with physicians and non-physician providers. The FDA also determined that the continued reporting of non-fatal adverse events by prescribers under the REMS was not warranted because of mifepristone’s safety record. During the COVID-19 public health emergency, the in-person dispensing requirement for mifepristone was enjoined by a court order for 6 months from July 2020 to January 2021. Based on the research and data collected during this period, the FDA found no indication that modification of the in-person dispensing requirement had increased adverse events. In April 2021, the FDA notified the American College of Obstetricians and Gynecologists (ACOG) that the agency would exercise enforcement discretion of the in-person dispensing requirement. In January 2023, the FDA formally amended the REMS, to permanently remove the in-person dispensing requirement, and adding a requirement that certified pharmacies can dispense mifepristone.

Lower Court Rulings

On April 7, 2023, Federal District Court Judge Matthew Kacsmaryk issued a ruling that would have blocked the FDA’s 2000 approval of mifepristone (See Tables 2 and 3). He ruled that the plaintiffs had standing to sue and were likely to succeed on the merits on their claims that the FDA acted “arbitrarily and capriciously” when approving mifepristone, and when it made changes to the rules for prescribing and dispensing the medication in 2016 and 2021. In addition, Judge Kacsmaryk found the plaintiffs had a substantial likelihood of prevailing on their claims that the FDA’s actions violate the Comstock Act by allowing mifepristone to be mailed to patients.

The FDA appealed the district court’s ruling to the 5^th Circuit Court of Appeals which also found that the plaintiffs have standing to bring the case but did not uphold the decision to order FDA to revoke mifepristone’s approval. Instead, the court ruled that the FDA acted improperly when changing the REMS. The court order would block the changes made in 2016 and 2021, rolling the dispensing and prescribing rules back to those in place in 2011. The effect of this would be to require in-person dispensing of the medication and permit only physicians to prescribe and dispense the medication, blocking the current ability of physicians, certified providers, and pharmacies to mail the drug. The 5^th Circuit Court of Appeals did not base their decision on the Comstock Act, but the plaintiffs and the defendant both appealed this decision to the Supreme Court.

What is the Supreme Court Considering?

The Supreme Court agreed to review the FDA’s appeal of the 5^th Circuit decision but denied the plaintiffs’ appeal requesting the Court to review the FDA’s original approval of mifepristone from 2000. Therefore, the Court’s review is limited to two major questions: whether the plaintiffs have standing to bring the case and whether the FDA’s 2016 and 2021 actions to revise the Risk Evaluation and Mitigation Strategies (REMS) and other conditions were arbitrary and capricious. The Court is not reviewing the FDA’s initial approval of mifepristone in the year 2000 nor the plaintiffs’ original claim that the FDA’s actions violated the Comstock Act.

Do the Plaintiffs Have Standing?

The first question the court must consider is whether the plaintiffs have legal standing to bring this case; without legal standing, the case does not proceed. In this case, the plaintiffs are doctors, associations and organizations that oppose abortion; none of them prescribe mifepristone. The issue of standing in the case has caught the attention of many pharmaceutical companies, which rely on the FDA’s decisions regulating drugs. Every drug has side effects. Many court watchers are concerned that if the Court rules that these plaintiffs have standing, then the door will be opened to anyone to bring a case against the FDA’s approval of any drug. The Pharmaceutical Companies, Executives, and Investors warn, “If allowed to stand, the decision below will invite a flood of meritless challenges to the FDA’s drug safety and efficacy decisions, including those brought by parties with no concrete interest at stake.”

The plaintiffs contend they are injured because the FDA has made mifepristone widely available and based on statistical probability, one of their members will likely have to treat a patient with side effects from taking mifepristone, which will force one of their members to act against their conscience in helping to terminate a pregnancy. The doctors assert that their injury is based on:

1. • having to divert time and resources away from their regular patients;
   • mifepristone patients exposing them to greater liability and increased insurance costs;
   • violation of their conscience when being forced to participate in an elective abortion and
   • enormous stress and pressure.

The FDA asserts that the plaintiffs have failed to show any concrete injury: “All of respondents’ theories of injury reduce to the assertion that FDA’s changes to mifepristone’s conditions of use could marginally increase the risk that one of respondents’ seven identified doctors may be called upon to treat a woman who has chosen to take mifepristone and experiences an exceedingly rare serious adverse event—a scenario that can occur only at the end of a long chain of contingencies involving independent decisions by third parties.”

The 5^th Circuit found that the doctors’ injuries are legally recognizable. If the Supreme Court limits standing based on the conscience violations injuries, then future litigation might be based on challenging the FDA’s approval of other drugs perceived to be controversial such as PrEP or medications for gender affirming care.

In their defense, the FDA and Danco contend that federal law allows doctors to refuse care based on a conscientious objection. In response, the AHM cites to the July 2022 Department of Health and Human Services guidelines  issued by the Biden Administration after the Dobbs ruling, which states that the Emergency Medical Treatment and Active Labor Act (EMTALA) requires hospitals to provide abortions as stabilizing care when that care is necessary to stabilize a patient. The 5^th Circuit agreed with AHM that the federal law does not alleviate the doctors’ conscience injury. (The Supreme Court is considering a different case about the interaction between EMTALA, the federal law that requires that hospitals to stabilize the health of patients presenting at emergency room and Idaho’s abortion ban this term.)

Were the FDA’s 2016 and 2021 Actions Arbitrary and Capricious?

Congress has authorized the FDA to review and approve drugs. At issue in this case, is the standard by which the FDA may alter the conditions for use, including the REMS, for a drug. The statute authorizing the FDA to use and modify REMS requires the FDA to balance the drug’s risks against the burden on patient access but does not prescribe a specific methodology for this review. AHM claims the FDA violated the Administrative Procedures Act (APA) when it failed to consider the cumulative effect of all the 2016 changes or to provide a satisfactory explanation for its decision not to study the cumulative effect of the changes.

The 5^th Circuit agreed with AHM and ruled that the FDA failed to examine the cumulative effect of all the proposed changes in 2016 through a single controlled study and did not explain why it did not do so. In addition, they found that in 2021, the FDA relied on incomplete data because, in 2016, the FDA removed the requirement for prescribers to report adverse events beyond the FDA’s standard reporting requirements. Further, the court found that the FDA relied on research that did not affirmatively support the suspending of the in-person dispensing requirement. The FDA maintains there is no requirement for the agency to conduct one study with all the proposed changes. The FDA contends that “[a] reviewing court’s only role is to ensure ‘that the agency has acted within a zone of reasonableness’ and ‘has reasonably considered the relevant issues and reasonably explained the decision.’” In addition, the FDA reports that the studies they relied on to make the REMS modifications support their conclusions that mifepristone is safe and effective without the need for mandatory in-person dispensing. They further maintain the Court should defer to their judgment as the agency has the expertise in this area–not the Court.

Many of the “friend of the court briefs” (amicus curiae) warn that the Supreme Court could destabilize the regulatory process for approving drugs in the U.S. For example, The Pharmaceutical Research and Manufacturers of America warns that the 5^th Circuit decision “threatens to disrupt the cycle of drug development and to upend the investment backed expectations of industry that ultimately undergird the availability of innovative medicines on which patients rely.” However, presenting an opposing perspective, former leaders of the Trump Administration claim that the FDA gave Danco special treatment, and if allowed to stand, other companies will expect this treatment.

Potential Impact on Medication Abortion Access and the FDA

The Supreme Court is specifically reviewing the rules that allow people to access mifepristone via telehealth without an in-person visit. Medication abortion accounts for nearly two thirds (63%) of abortions in the United States. In 2022, 789 facilities offered medication abortion, and 243 of these facilities in 27 states provided telehealth medication abortions with an option to mail the abortion pills to the patients.

The Society of Family Planning estimates that 16% of all abortions in September 2023 were provided via telehealth, with nearly 14,000 telehealth abortions that resulted in medications being dispensed via mail. Many of these abortions were performed by virtual-only clinics that offer medication abortion through telehealth. These new clinics were not an option for abortion seekers until 2021, and the prevalence of virtual-only abortion providers has been growing since.

The court’s decision could also substantially reduce the number of abortions that could occur using mifepristone. The 2011 REMS permitted mifepristone to be used up to 7 weeks gestation, while the 2016 REMS expanded access to mifepristone up to 10 weeks gestation. According to the 2021 CDC abortion surveillance data, more than four in ten medication abortions occur 7 weeks and beyond (See Figure 1).

If the Supreme Court affirms the 5^th Circuit’s decision to roll back the requirements to the 2011 protocols, the new protocols the FDA has established removing the in-person dispensing requirement, permitting telehealth abortions, and establishing the process for pharmacies to become certified to dispense mifepristone would be eliminated.

The case also raises questions about the role of the courts in reviewing the FDA’s determinations about a particular drug. This is the first case to ask the Supreme Court to overrule an FDA decision that a drug is safe and effective. The outcome of this case could have far-reaching implications for the FDA’s authority to continue to regulate not only mifepristone, but a wide range of other drugs, including those that could be perceived to be controversial today and in the future. Depending on how the Supreme Court rules, we may see the door opened to new litigation, and a major shift in the FDA’s authority in regulating drugs.

This factsheet was updated on March 10, 2025 to reflect policy updates and new data.

On June 24^th, 2022, the Supreme Court ruled on the Dobbs v. Jackson Women’s Health Organization, overturning Roe v. Wade. States can now set their own policies protecting or banning abortion without any federal standard protecting access to abortion. This has created a new focus on medication abortion as an option for expanding access to people facing barriers to abortion care.

Medication abortion, also known as medical abortion or abortion with pills, is a pregnancy termination protocol that involves taking two different drugs, Mifepristone and misoprostol, that can be safely used up to the first 70 days (10 weeks) of pregnancy according to the U.S. Food and Drug Administration (FDA).  The World Health Organization has authorized use up to 12 weeks of pregnancy. Since the FDA first approved the drug in 2000, its use in the United States has quickly grown. In 2023, 63% of abortions in the US were medication abortions. The medication abortion drug regimen approved by the FDA is available in many states across the nation, however, dispensing these pills for the purpose of terminating a pregnancy is now banned in some states. This factsheet provides an overview of medication abortion, how it is used and regulated, the role of the drug in self-managed abortions, and an analysis of the intersection of federal and state regulations pertaining to its provision and coverage.

What is a Medication Abortion?

There are two medication abortion regimens that have a long safety and efficacy record: mifepristone with misoprostol and misoprostol alone. Both involve taking oral medications to terminate a pregnancy.   

Mifepristone and Misoprostol Regimen

The most common medication abortion regimen in the United States involves the use of two different medications: mifepristone and misoprostol. Mifepristone, also known as the abortion pill, or RU-486 is sold under the brand name Mifeprex and through a generic manufactured by GenBioPro in the United States. Mifepristone works by blocking progesterone, a hormone essential to the development of a pregnancy, and thereby preventing an existing pregnancy from progressing. Misoprostol, taken 24–48 hours after mifepristone, works to empty the uterus by causing cramping and bleeding, similar to an early miscarriage. A follow-up visit can be scheduled a week or two later, to confirm that the pregnancy was terminated via ultrasound or blood test. The FDA has found that medication abortion is a safe and highly effective method of pregnancy termination. When taken, medication abortion successfully terminates the pregnancy 99.6% of the time, with a 0.4% risk of major complications, and an associated mortality rate of less than 0.001 percent (0.00064%).

The FDA first approved Mifeprex in 2000. In 2016, the FDA updated and approved a new evidence-based regimen and drug label. This regimen approves use of medical abortions for up to 70 days (10 weeks) of pregnancy (Table 1). Until 2019, mifepristone was only sold under the brand name Mifeprex, manufactured by Danco Laboratories. In 2019, the FDA approved GenBioPro, Inc.’s application for generic mifepristone. In 2021, the FDA announced they would not enforce the in-person dispensing requirement that had been in effect since the approval of mifepristone. With the new REMS in 2023, the in-person dispensing requirement was formally removed.

Misoprostol-Only Regimen

While the combined regimen of mifepristone and misoprostol for medication abortion is recommended, there is a second medication abortion protocol using misoprostol–only that is more commonly used internationally and currently not approved by the FDA. The regimen is also recommended for up to 70 days (10 weeks) of pregnancy. It involves taking 800 µg (4 pills) of misoprostol sublingually or vaginally every three hours for a total of 12 pills. Research has shown the misoprostol-only regimen to be a safe and highly effective method of pregnancy termination, however it may result in a higher incidence of side effects, particularly diarrhea, fever and chills. When taken, the misoprostol-only regimen successfully terminates the pregnancy approximately 80-100% of the time, with a complication rate of less than 1%. Some U.S. telehealth organizations have been providing the misoprostol-only regimen as an option for medication abortion for a number of years.  

Risk Evaluation and Mitigation Strategies (REMS)

In 2011, the FDA added a Risk Evaluation and Mitigation Strategy (REMS) to the dispensing requirements for mifepristone permitting only medical providers who had obtained certification from the manufacturer to prescribe and directly dispense the drug. This requirement has had the effect of limiting the number of clinicians able to prescribe medication abortions, but also necessitated an in-person visit to a health care setting and meant patients could not obtain the medication from a retail pharmacy or by mail.

On December 16, 2021, the FDA removed the in-person dispensing requirement for mifepristone and expanded the distribution to include certified pharmacies in addition to certified clinicians. This change removed the requirement to dispense the medication in person and expanded the opportunity for telehealth in states that have not banned abortion. Despite the change to the in-person requirement, prescribers are still required to be certified by the manufacturers. On January 3, 2023, the FDA approved a protocol for pharmacies, allowing those that have been certified by the manufacturers to dispense mifepristone directly to patients. In March 2024, two major pharmacy chains in the U.S. announced they had become certified to dispense mifepristone and would start dispensing the medication to patients in certain states later that month. Table 2 shows the change in REMS from 2011 to 2023.

State Regulations and Availability

State laws that ban or restrict abortion apply to medication abortion just as they apply to abortion procedures. There are currently large swaths of the country, mostly in the South and Midwest that ban abortion. Even though the federal FDA has approved mifepristone as safe and effective, following the Dobbs decision, the availability of medication abortion today depends on state laws. Even before the Dobbs decision, however, some states restricted access to medication abortion either by blocking the use of telehealth abortions by mandating in-person visits for abortions, imposing requirements for in-person dispensing, or limiting the kinds of clinicians who could dispense the pills (only permitting MDs to dispense). In many states these laws are now superseded by state laws that ban abortion.

There are other ways that state laws also affect use of and access to medication abortion. Some states require that patients be counseled about unsubstantiated claims about the ability to reverse an abortion after mifepristone is ingested. For example, Nebraska, a state that hasn’t banned abortion, requires patients to be counselled that medication abortion may be reversed if given a high dose of progesterone after taking mifepristone—despite a lack of scientific evidence to support this claim. Similarly, Utah requires counseling that mifepristone alone is not always effective in ending a pregnancy and that patients may still have a viable pregnancy after taking mifepristone despite its record of effectiveness. Prior to banning abortion Arkansas, Idaho, Kentucky,  Oklahoma, South Dakota had similar requirements. Research demonstrates that APCs, such as nurse practitioners, physician assistants, or nurse-midwives, can provide medication abortion as safely as physicians can, but they are only permitted to do so in 24 states and DC out of the 38 states where abortion is not currently banned.

Telehealth

Telehealth can be used to expand access to health services in areas where the number of clinicians who provide abortion care is limited. Many patients, particularly those who live in rural communities, must travel long distances to obtain abortion services even in states where abortion is still permitted, which has raised interest in the potential of telehealth to expand access medication abortion. Because the updated FDA label now allows for telehealth, mifepristone has emerged as an option for patients who are either unable to travel to clinic or for other reasons wish to have an abortion in the privacy of their own home, if permitted by state law.

As part of efforts to limit abortion access, some states have taken action to block the use of telehealth for abortion. Among the states that have not banned abortion, thirteen states have at least one restriction that requires at least one trip to the clinic, and effectively ban telehealth for medication abortion (Figure 1).

Cost

According to a recent study, the median self-pay price for medication abortion significantly increased from $495 in 2017 to $560 in 2020. Although Danco Laboratories does not make the cost of Mifeprex public, providers report that Mifeprex pills alone cost them around $90 a pill. GenBioPro, the manufacturer of the generic mifepristone drug also does not report the cost of their pill but has stated that they want to drive down costs for those who choose medication abortion. Private insurance coverage of abortion services is variable and depends on the type of insurance plan, the policy holder’s state of residence, and employer coverage decisions. Federal Medicaid funding only pays for abortions when the pregnancy is a result of rape or incest or a threat to the pregnant person’s life. Seventeen states have opted to use their own state funds to pay for abortions, including medication abortions, for Medicaid enrollees. For those who do not have abortion coverage, there are limited means of financial support, promoted on both Danco and GenBioPro’s website. The National Abortion Federation, as well as local abortion funds are sometimes able to cover some of the cost of an abortion (including travel) for a pregnant person. Outside of these funding sources or a sliding fee scale clinic, there are few options to help with abortion costs.

Use

Although the overall rate of abortion has declined over the past two decades, the use of medication abortion as a share of all abortions has greatly increased over the years. According to Danco Laboratories, by 2016, over 2.75 million women in the United States had used Mifeprex since its FDA approval in 2000. Data from the Centers for Disease Control and Prevention (CDC) show medication abortions have increased steadily over the past 15 years. A Guttmacher Institute report found that medication abortion accounted for 63% of all nonhospital abortions in 2023, although this is likely an undercount since it does not include self-managed abortions.

Self-Managed Abortion

Self-managed abortion, sometimes referenced as “self-induced” or “at-home” abortion, is when a person ends a pregnancy outside the medical care setting, typically by ordering abortion pills online. Patients may seek to manage their own abortion for many reasons, including state bans, clinic access barriers, cost, transportation, time limitations, and privacy. There are different medication protocols that can be used for a self-managed abortion. As detailed in this JAMA review, an individual can take the FDA-approved medication abortion regimen of mifepristone and misoprostol pills or misoprostol pills alone.

There are a number of companies that offer self-managed abortion services using different approaches. Some companies have a clinician that reviews a customer’s medical information and may have a telehealth visit. Other companies, such as AidAccess based outside the United States, will mail abortion medications to an individual without requiring a clinician visit. Plan C Pills operates a website that provides a list of online retailers in every state and includes information about clinician involvement, price, ship time, product quality, as well as information about how to take the drugs and resources for financing assistance. Prices differ between companies, but typically costs are lower than average charges for a clinic abortion as there is typically no involvement with a brick and mortar clinic. One 2017 study found the median cost of mifepristone-misoprostol products ordered online is approximately $205.

Self-managed abortions have occurred around the world for years, particularly in areas where abortion access in the medical care system has been limited. Before the FDA removed the REMS requirement for in person dispensing of medication abortion, access to telemedicine abortion care (either through the medical system or self-managed) was extremely limited in the United States. Interest in self-managed abortion has grown in recent years in the United States, particularly since the Dobbs decision. For example, research has documented a sharp increase in requests for abortion pills to the company AidAccess since the Dobbs ruling, rising from an average of 82.6 requests daily before the ruling to 213.7/day after it was issued, with the largest increases in states that have banned abortion.

None of the current state abortion bans or restrictions criminalize pregnant people for obtaining self-managed abortions, yet there have been many documented cases of people facing criminal charges for self-managing an abortion. Some states impose criminal penalties on clinicians or others who help an individual obtain abortion services. These policies can create a climate of fear related to self-managed abortion for both patients and clinicians, for instance if a patient were to present to a clinician for a complication or follow up care after a self-managed abortion. Some major medical and public health groups such as ACOG, AMA, and APHA oppose any criminalization of patients that seek self-managed abortion.

Conclusion

The use of medication abortion has grown significantly since its approval by the FDA in 2000. The FDA update of the REMS in 2023 has expanded the availability of medication abortion and broadened the use of telehealth dispensing. However, state abortion bans, specific bans on telehealth for medication abortion, and state-level requirements for in-person dispensation of mifepristone and for in-person counseling visits and ultrasounds that are not medically recommended will continue to restrict access in many states.

Note: This brief was updated on March 20, 2024 to incorporate the latest available data.

For over 60 years, American women have relied on oral contraceptive pills to prevent pregnancy. Oral contraceptives are the most widely used form of reversible contraception and are also commonly used to manage other health conditions. In the U.S., daily oral contraceptive pills have traditionally only been available with a prescription. In July 2023, the U.S. Food and Drug Administration approved the first over-the-counter daily oral contraceptive pill, eliminating the requirement for a prescription from a clinician. This progestin-only pill is now available for purchase in stores and online at most major retailers. This brief provides an overview of oral contraception, discusses private insurance and Medicaid coverage, and reviews strategies to promote and expand women’s access to oral contraceptives.

Background

In 1960, the Food and Drug Administration (FDA) approved the sale of Enovid for use as the first oral contraceptive. Controversial from its earliest days, in 1965, the Supreme Court ruling in Griswold v Connecticut upheld married women’s rights to contraception, followed in 1972 by the Supreme Court’s decision in Eisenstadt v Baird which extended the right to single, unmarried individuals.

Oral contraceptive pills (OCP) consist of the hormones progestin and estrogen, or only progestin, and must be taken orally once per day in order to prevent pregnancy. Currently, there are three different types available on the market: the combination pill, the progestin-only pill, and the continuous use pill. The three formulations vary in their chemical hormonal composition as well as regimen for use (Table 1). Different brands further add to the diversity of OCP available by altering the type and/or dose of hormones. Emergency contraceptive pills are also a type of OCP, consisting of the progestin levonorgestrel, but are not intended for daily use. Rather, they are used to prevent pregnancy after unprotected sex.

Both the combined and progestin-only pills are highly effective with perfect use, with a failure rate (rate at which women become pregnant while using the contraceptive) of less than 1%. However, the failure rate with “typical use” is 9%, which accounts for inconsistent or incorrect use.

Use

The pill was the first FDA-approved contraceptive to be used in the U.S. and is still the most commonly used form of reversible contraception. According to KFF analysis of the 2017-2019 National Survey of Family Growth, the most recent years for which data are available, about one-quarter (24%) of women ages 15-44 who currently use contraception reported using the pill as their method of choice, a decline from 31% in 2002 (Figure 1). At the same time, there has been an increase in the use of long-acting reversible contraceptives (LARCs), such as intrauterine devices (IUDs) and implants, which have been promoted by several medical groups in recent years.

Among women ages 15-44 who use any form of contraception, OCP use is higher among younger women and decreases with age. A larger share of White women (29%) use OCP than Hispanic (14%) or Black (13%) women. OCP use increases with higher educational attainment (Figure 2).

OCPs are primarily used for pregnancy prevention, but they can also be used to address other health conditions, particularly menstrual-related disorders such as menstrual pain, irregular menstruation, fibroids, endometriosis-related pain, and menstrual-related migraines. Use of combined pills for acne has been formally approved by the FDA for specific brands. While most (82%) women who use OCP take them primarily to prevent pregnancy, 18% use them solely for non-contraceptive reasons such as to manage a medical condition (unpublished analysis from the 2022 KFF Women’s Health Survey).

Oral contraceptives are safe for most women. Possible side effects include headache, nausea, breast tenderness, and breakthrough bleeding. The combined hormonal pills may be associated with a small increased risk of deep vein thrombosis, heart attack and stroke for some women.

Insurance Coverage and Financing of Oral Contraceptives

OCPs have not always been covered by insurance plans in the same way as other prescriptions drugs. This became the focus of legislative action in the early 1990’s, first at the state and then the federal level. State legislatures began passing “contraceptive equity” laws which typically required that plans offering prescription drug coverage also cover contraceptives on the same terms as other prescriptions. Some state laws went further to require that plans cover all FDA-approved contraceptives. However, these state laws only applied to plans that were regulated by the state and did not include self-funded employer-sponsored plans, which are federally regulated through ERISA and cover most workers with employer-sponsored insurance. Minimum coverage standards for employer-sponsored plans were established in 2000, when a federal ruling from the Employment Equal Opportunity Commission found it unlawful under the Civil Rights Act for plans to deny coverage for contraceptives if they covered other preventive prescription drugs and services. By 2010, 28 states required insurers that cover prescription drugs to provide coverage for the full range of FDA-approved contraceptives.

Private Insurance and the ACA

In 2010, the Affordable Care Act (ACA) took state laws further by requiring most private plans (including self-funded, small and large group, and individual plans) to cover a wide range of recommended preventive services, without patient cost-sharing. In 2011, the Health Resources and Services Administration (HRSA), following recommendations issued by the Institute of Medicine, added that all FDA-approved, prescribed contraceptive methods and patient counseling for women with reproductive capacity be covered, without cost sharing, as a preventive service. Plans that were in effect on or before March 23, 2010, known as “grandfathered plans,” are not required to cover preventive services, or they may require cost sharing. Additionally, plans offered by an employer with a religious objection to contraception may exclude this coverage from their plan.

Under the ACA, most private health insurance plans must cover at least one form of each of the 18 FDA-approved contraceptive methods for women without cost sharing. This means that plans must cover at least one of each of the three different types of oral contraceptives – the combined pill, the progestin-only pill and the continuous use pill – though it is up to an insurer’s discretion using reasonable medical management practices whether to cover a brand name or generic contraceptive if both are available. Insurers are required to cover other contraceptives if medically necessary and must provide a process for policyholders to request coverage of a contraceptive that is not already covered without cost sharing by the plan. While some contraceptive methods are available over the counter without a prescription, plans typically require a prescription to trigger coverage.

Additionally, 15 states and D.C. have passed laws that build on the federal requirement for no cost sharing for all FDA-approved contraceptive methods for women (Figure 3). Some of these states have gone beyond the ACA requirements, mandating coverage of vasectomies and/or over-the-counter contraceptives.

Today, fewer women are paying out of pocket for contraceptives as a result of the ACA’s contraceptive coverage requirement. According to a 2019 KFF analysis of the IBM MarketScan Commercial Claims and Encounters Database, among women with health insurance from a large employer who use OCP, the share experiencing out-of-pocket spending on OCP declined from 96% in 2010 to 11% in 2017.

Controversial since its inception, the provision has sparked litigation and new regulations in response to lawsuits that have reached the Supreme Court. Although the Obama administration allowed certain religious employers with an objection to contraception to request an exemption from the requirement, in 2020, the Supreme Court upheld two Trump administration rules that expanded eligibility to almost all employers that have a religious or moral objection. Female employees, dependents, and students of these exempt employers are not entitled to coverage for the full range of FDA-approved contraceptives.

Public Programs

Federal law has long required state Medicaid programs to cover family planning services and supplies without cost sharing and provides states with an enhanced federal match for providing these services. States that expanded Medicaid under the ACA must follow the ACA requirements for private plans and are required to cover at least one form of all 18 FDA-approved contraceptive methods for women. There is no similar requirement for traditional full-scope Medicaid or through a Medicaid family planning expansion program, and there is variation between states on the specific services that are covered.

Since the passage of the ACA, some states have also strengthened their contraceptive coverage requirements for Medicaid (Figure 3). For example, California passed the Contraceptive Coverage Equity Act of 2014 which extends the ACA’s coverage policy beyond private plan beneficiaries to all Medicaid managed care enrollees, regardless of whether they qualify as a result of the ACA expansion or through traditional pathways. California expanded this coverage in 2022 to cover OTC contraceptive drugs and products without a clinician’s prescription and extends this coverage to fee-for-service Medicaid beneficiaries. Delaware, D.C., Massachusetts, Nevada, New Hampshire, and Vermont have since enacted similar contraceptive equity laws that apply to both private insurance plans and Medicaid.

Coverage for oral contraceptives is also required in the Indian Health Service, the federal program that provides care on or near Indian reservations as well as in the Tricare program for active military personnel and their dependents. Medicare, the federal program for seniors 65 and older as well as younger adults with permanent disabilities, does not require coverage for oral contraceptives. According to KFF analysis of the 2020 Medicare Current Beneficiary Survey, 1.2 million women under age 50 were enrolled in Medicare. Medicare beneficiaries that have enrolled in private Medicare Advantage plans or who have opted into the Medicare Part D prescription drug benefit may have coverage for oral contraceptives, but the scope of coverage varies between plans. There are more than 878,000 women of reproductive age that were dually eligible for Medicaid and Medicare.

Expanding Access to Contraception

The 2022 KFF Women’s Health Survey found that one-third (33%) of female hormonal contraceptive users have missed taking their birth control because they were not able to get their next supply on time. Furthermore, it is estimated that more than 19 million women of reproductive age in need of publicly-funded contraception live in an area considered to be a contraceptive desert, meaning there is limited access to a publicly-funded provider who offers contraception. Research also points to the impacts of state and federal policies on the shrinking number of family planning providers that offer the full scope of contraceptive methods in some communities.

In recent years, there has been public discussion and state and federal policy action to reduce contraceptive access barriers by expanding the availability of daily oral contraceptive pills through different mechanisms. Approaches that have been adopted include making OCP available over the counter without a prescription; expanding the ability of pharmacists to dispense or prescribe OCP; extending the supply of contraception that is dispensed at one time; and using mail-based online services or smartphone applications.

Over-the-Counter (OTC) Access

In July 2023, the U.S. Food and Drug Administration (FDA) approved the progestin-only Opill for OTC use, making it the first OTC daily oral contraceptive pill. Opill is now available for over-the-counter purchase without age restriction in stores and online. The suggested retail price of Opill is $19.99 for one month’s supply or $49.99 for three month’s supply. Although it is farther behind in the process, another pharmaceutical company, Cadence, is working toward FDA approval of an OTC version of its combined (progestin and estrogen) oral contraceptive pill, Zena.

Medications may be eligible for OTC status if the FDA determines that they can be used appropriately by consumers for self-diagnosed conditions; they do not require a clinician for safe and effective use; and they have a low potential for misuse and abuse. Applicants typically must conduct studies to assess whether consumers are able to comprehend the product’s labeling and use the product safely and appropriately without the supervision of a clinician. Research has found that people, including those under the age of 18, are able to understand label instructions and contraindications for OTC contraception without clinician involvement.

Research suggests that OTC access would increase the use of contraception and facilitate continuity of use. It could also allow women to save time spent on travel, at doctor’s office, and off work. Other research suggests that OTC oral contraceptives can especially benefit populations who have historically faced barriers to accessing contraceptive care, such as young adults and adolescents, those who are uninsured, and those living in contraceptive deserts or areas with limited access to health centers offering the full range of contraceptive methods. The 2022 KFF Women’s Health Survey found that four in ten (39%) reproductive-age women would be likely to use OTC birth control if approved by the FDA, increasing to six in ten (60%) of oral contraceptive users.

The ACA currently requires no-cost coverage for contraceptives in most private plans and for Medicaid expansion populations but plans typically require a prescription in order to trigger coverage, even for contraceptive methods that are available OTC without a prescription. Requiring plans to cover non-prescribed contraceptives would require legislation at the federal or state level, or administrative changes to the ACA’s preventive services policy. Seven states (CA, CO, MD, NJ, NM, NY, and WA) have laws or regulations requiring state-regulated private health insurance plans (individual, small group, and large group markets) to cover, without cost sharing, OTC contraception without a prescription. While New York’s law applies to emergency contraception only, the other state laws apply to non-prescribed contraceptive drugs broadly (Figure 4). Seven states (CA, IL, MI, MD, NJ, NY, and WA) use state-only funds to cover at least some OTC contraception without a prescription for Medicaid enrollees. However, these states, with the exception of California, cover non-prescribed emergency contraception and/or condoms only, so a change in law or policy would be needed to cover a daily oral contraceptive pill without a prescription. States wishing to cover OTC contraception without a prescription for enrollees must use state-only funds as federal funds are only available for prescribed drugs.

(See KFF State Health Facts for more details on each state’s private insurance law and Medicaid coverage, including contraceptive methods covered.)

For more information on how states have implemented insurance of OTC contraceptives, see KFF’s report Insurance Coverage of OTC Oral Contraceptives: Lessons from the Field and issue brief Over-the-Counter Oral Contraceptive Pills.

Pharmacy Access

Another avenue that is gaining support in some states allows pharmacists to prescribe or dispense OCP without requiring an in-person medical visit to a physician. As of March 2024, 34 states and D.C. have passed laws to allow pharmacists to prescribe certain self-administered contraceptives to women (Figure 5). All of these states allow pharmacists to prescribe at least oral contraceptives, but states vary in other details, such as the type of prescriptive authority (e.g., collaborative practice agreements, statewide protocols, and standing orders), minimum age requirements, the type of contraceptive that pharmacists can prescribe, the length of the supply, and whether the patient needs a prior prescription from a physician.

Although expanded scope of pharmacist practice can remove some barriers to obtaining contraceptives, challenges still remain for women seeking a prescription for contraception from a pharmacist. For example, pharmacies typically charge consultation fees, which some reports suggest can be as high as $50 in certain areas. Although insurers are generally required to cover contraceptives without cost sharing, they are not obligated to cover this fee. Also, pharmacies can choose not to participate or may not have any pharmacists trained to provide this service.

From the pharmacy perspective, pharmacists must elect to complete additional education requirements, which vary by state, and often include several hours of continuing education from an accredited training program. Additionally, states may not have a reimbursement mechanism in place to pay pharmacists for providing this service. For example, while Oregon and Hawaii require plans to reimburse the dispensing entities, California’s law does not require reimbursement for payers other than Medicaid. Lack of or low reimbursement for pharmacist prescribing can result in fewer pharmacies choosing to provide this service.

Extended Supply

The 2022 KFF Women’s Health Survey found that more than one-third (36%) of reproductive-age females who use oral contraception have missed taking it on time because they were unable to get their next supply. Another approach to facilitate access to oral contraceptives involves increasing the dispensing period of contraceptives to 12 months per prescription. Currently, dispensing patterns vary by insurer, but the vast majority of oral contraceptive pills users receive fewer than 6 packs of pills at a time. In 2022, among reproductive-age females who reported using birth control pills in the past year, 32% received 1-2 packs at a time, 63% received 3-5 packs, and just 6% received a supply of 6 months or more. Providing women with an extended supply of pill packs may lead to more consistent contraceptive use. Women who receive a 1-year supply have been found to be 30% less likely to have an unintended pregnancy compared to women receiving a 1–3-month supply.  

In 2015, Oregon became the first state to pass a law requiring state-regulated plans to cover a three-month supply of contraceptives when first prescribed, followed by a 12-month supply of contraceptives. Laws requiring coverage for 12 months of oral contraceptives have since been enacted in 23 additional states and DC (Figure 6). Louisiana and New Mexico require coverage for a 6-month supply. While most of these states have also enacted policies that require no-cost contraceptive coverage similar to the ACA’s contraceptive coverage provision, nine states (CO, HI, MI, MT, RI, SC, TX, VA, and WV) with extended supply laws have not yet done so. This means that although insurers must cover a 12-month supply in these states, state law does not prohibit cost sharing; however, most plans must abide by the federal requirement and not charge any cost sharing for prescribed, FDA-approved contraceptive methods.

Telecontraception

In recent years, a growing number of companies providing contraception through online platforms (“telecontraception”) have entered the market and are providing a new option for people to obtain contraceptive supplies without the need for an in-person visit. A growing number of online services and smartphone applications offer options for patients to speak with providers by video or chat, get prescriptions, and order birth control pills through mail delivery. These services work by collaborating with physicians, pharmacies, and sometimes health insurers to prescribe and ship OCP to the patient’s home or a local pharmacy.

Costs for these services vary between companies. Most charge a fee for the service, which is typically not covered by insurance and can range from a $15 fee per consultation/prescription to a $99 yearly membership that covers the medical evaluation and customer support for the duration of the prescription.

A 2020-2021 KFF study on telecontraception companies found considerable variation in method availability and acceptance of insurance. Many telecontraception companies accept private insurance and/or Medicaid, to pay for the cost of the pills, while others do not. The price of contraception offered by these platforms vary by method and by brand; generic pills typically range in price from $5 to $25 per pack without insurance.

Most companies ship OCPs free of charge to the patient’s home, while some require pick up from a local pharmacy. Prescriptions are often valid for 12 months and patients are sent either a one- or three-month supply of pills. Video/audio consultations are required by certain services before receiving the prescription. Services that do not require a consultation do require patients to complete a health assessment or questionnaire to determine eligibility and the appropriate pill. People in every U.S. state have access to at least one of these services, but the minimum age to use the service varies by company and state law, although many require the person to be at least 18 years old.

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Oral contraceptives are the most commonly used form of reversible contraception in the U.S. Most women with private insurance or Medicaid can receive no-cost coverage for OCPs. The FDA recently approved Opill, the first ever daily OCP available over the counter, though insurance coverage of the product will largely depend on state efforts in the absence of federal guidance. Several states have enacted policies to broaden OCP access, particularly through pharmacist prescribing and insurance coverage for extended supplies and non-prescribed OTC contraceptives. The use of telemedicine to expand OCP access continues to evolve, with many women now able to obtain OCP using smartphone and web-based services.