Participants in AI Project Targeting Medicare Fraud, Waste, and Abuse at CMS Announced

On Tuesday, November 25, Centers for Medicaid and Medicare Services (CMS) Administrator Dr. Mehmet Oz announced the ten participants in the agency’s artificial intelligence project that was announced in August. The “Crushing Fraud Chili Cook-Off Competition” participants will move into the second phase where they will utilize their machine-learning models to analyze Medicare claims data and identify trends and variances. Abt, Amida, basys.ai, CORMAC, Hilltop Institute, KPMG, Milliman, MindPetal, Stanford and UCSF, and Visual Connections will now have access to CMS data to develop their models with a “best in show” software solution being announced on December 15. The program will use Medicare data from 2022 to 2024 on fee-for-service hospice, Part B, and durable medical equipment claims, randomly sampling 5% of Medicare beneficiaries. The Chili Cook-Off program aims to identify and reduce fraud in Medicare, particularly around upcoding, false billing, and services not rendered to patients (Inside Health Policy, November 25).

CMS Innovation Center Announces New Tech, Outcome-Based Model for Medicare

On December 1, the CMS Innovation Center announced a new voluntary model, Advancing Chronic Care with Effective, Scalable Solutions (ACCESS). The ACCESS Model will focus on addressing common chronic conditions among Medicare enrollees, including hypertension, diabetes, obesity, chronic musculoskeletal pain, depression, and kidney and heart disease. The model will utilize Outcome-Aligned Payments (OAP) to assist providers in leveraging technology-supported solutions to address chronic disease. Participating organizations under Original Medicare will receive recurring payments for managing patients’ qualifying conditions with full payment available upon achieving positive health outcomes for patients. The organizations must be enrolled as a Medicare Part B provider and designate a physician Clinical Director to support oversight, safety, and compliance. CMS intends for the ACCESS Model to compliment traditional care, with primary care providers or other clinicians referring patients to ACCESS organizations, with the option to bill for a “co-management payment” for reviewing patient data and coordinating with ACCESS organizations. The ACCESS Model will start on July 1, 2026, and run for ten years. Applications for the model have not yet been released, but must be submitted by April 1, 2026, to be considered for the first performance period (CMS.gov, December 1).

Senate Health Hearing to Be Set Following Conflicts on ACA Subsidy Next Steps

On November 26, Senator Bill Cassidy (R-LA) announced that there will be a hearing this week regarding health reform options, with the plan to debate options for ACA enhanced subsidies that are set to expire at the end of the year. The Trump Administration initially planned to announce its plan to extend subsidies for 2 years with reforms and the addition of an FSA/HSA option, but the announcement was subsequently delayed due to the lack of GOP support, with many in the party divided on the issue (Inside Health Policy, November 26).

State Budgets Face Long-Term Pressure Under H.R.1 Funding Shifts

Federal policy changes in the H.R.1 bill will leave states covering a larger share of Medicaid and SNAP administrative costs. The new requirements increase staffing, eligibility work, and public communication needs, creating budget pressures that states did not plan for during their current budgeting cycles. Medicaid officials reported that reducing provider rates or cutting core services is not a realistic response, especially because cuts to preventive or behavioral health care often lead to higher spending when medical or behavioral conditions worsen. The reduction in federal SNAP administrative reimbursement adds another budget challenge, with some states already identifying substantial gaps. Budget analysts cautioned that rainy-day funds cannot support ongoing obligations created by these federal changes. Long-term financing approaches will be necessary to manage the sustained shift in cost responsibility from the federal government to the states (Inside Health Policy, November 26).

CMS Secures MFPs of 15 Medicare Part D Drugs for Initial Price Applicability Year 2027

In its second round of drug negotiations, CMS secured maximum fair prices (MFPs) for 15 Medicare Part D drugs, with price cuts ranging from 38% to 85%, including:

• Novo Nordisk’s GLP-1 Medications are down 71% from 2024, at $274 for a 30-day supply, higher than the initial agreement of $245.
• Teva Pharmaceuticals’ Huntington’s Disease treatments are down 38%, at $4,093.
• Boehringer Ingelheim’s type 2 Diabetes drug is down by 84%, at $78.

The drugs in these deals support savings for approximately 5.3M Part D enrollees and account for 15% in gross prescription drug costs in 2024. CMS is expected to make a public announcement regarding the negotiated prices and their reasonings by March 2026. On November 20, leaders of the House Democratic Health Committee introduced the Lowering Drug Costs for American Families Act that looks to extend the former drug negotiation program and repeal certain changes within H.R. 1, or Public Law 119-21 (Inside Health Policy, November 30; CMS, November 25; Energy & Commerce, November 20).

Hospitals Sue to Block Federal Pilot Program Changing 340B Drug Discounts

Hospital groups are seeking to stop a federal pilot program that would replace upfront 340B drug discounts with post-sale rebates. In a lawsuit filed in Maine, the American Hospital Association, the Maine Hospital Association, and four safety-net hospitals argue that the Health Resources and Services Administration implemented the program without following required rulemaking procedures or adequately responding to concerns raised during public comment. Providers say that shifting to a rebate system, which requires hospitals to verify 340B eligibility before receiving any savings, will delay revenue, increase administrative costs, and strain financially vulnerable facilities. Although the program initially applies to only a limited number of widely used drugs, participation is mandatory for all 340B entities, and hospitals were given only two months to prepare. Federal officials describe the initiative as a test to reduce fraud in a program that has $66.3B in annual drug purchases, while lawmakers continue to question whether 340B savings consistently benefit patients (Healthcare Dive, December 2).

CMS Repeals Minimum Staffing Standards

CMS is repealing the staffing provisions of the 2024 Minimum Staffing Final Rule because Public Law 119-21 prevents CMS from implementing or enforcing those requirements until September 30, 2034. The moratorium applies to the staffing provisions in 42 CFR 483.5 and 42 CFR 483.35, which include the definition of hours per resident per day, and the specific staffing hour requirements established in 2024. These provisions required facilities to meet daily levels of registered nurse and nurse aide time for each resident and expected a registered nurse to always be present. CMS explains that keeping these requirements in place when they cannot be enforced would create confusion for facilities and regulators. CMS also notes that many rural and tribal facilities reported that the required staffing hours would be difficult to reach because of long-standing workforce shortages. National projections indicate that shortages of registered nurses will continue through the next decade, and two federal district courts have already vacated major parts of the 2024 rule. Tribal leaders also stated that the staffing hour expectations would place unsustainable pressure on long-term care facilities in Indian Country.

Because the statutory moratorium makes the 2024 staffing hour provisions unenforceable, CMS is removing them from the Code of Federal Regulations and restoring the earlier regulatory structure. The interim final rule removes the definition of hours per resident per day from 42 CFR 483.5 and revises 42 CFR 483.35 so that it once again reflects the statutory requirements that a facility must have a registered nurse onsite for at least eight consecutive hours each day and must employ a full-time director of nursing unless a waiver applies. These revisions replace the 2024 expectations for continuous registered nurse coverage and specific daily staffing hours with longstanding statutory standards. CMS also updates several cross references to ensure accuracy. CMS states that these revisions are needed to align the regulations with current law and to provide a clear and enforceable framework during the moratorium period (Federal Register, December 3).

House Approves Five-Year Hospital at Home Extension

The House passed a bill that would extend Medicare’s Acute Hospital Care at Home program for five years, aiming to end the cycle of short, uncertain renewals that have complicated hospital operations since the model began during the pandemic. The program allows eligible patients to receive inpatient-level care in their homes through remote monitoring and in-person visits, but a recent lapse during the government shutdown showed how disruptive temporary extensions can be. A longer authorization is expected to provide stability for current participants and encourage more hospitals to adopt or expand these services. The bill has broad support from major health systems and telehealth organizations, which note that hundreds of hospitals already rely on the model (Fierce Healthcare, December 2).