Fraud Task Force Removes 760K Enrollees from ACA Marketplace

According to an exclusive report from the Wall Street Journal, the White House Task Force to Eliminate Fraud will cancel premium subsidy payments for 760,000 individuals on the Affordable Care Act Marketplace, alleging that these accounts are either ineligible or fraudulent. CMS officials state that these cancellations will save the federal government approximately $2.20B. Moreover, CMS plans to verify the immigration status and income eligibility of an additional 415,000 current enrollees and sunset a policy which allowed enrollees to receive monthly premium subsidies without providing identity and eligibility documentation. The Trump administration has been working to reduce or eliminate potential fraud within the Marketplace since taking office in 2025, including revoking 66 agents from the Marketplace with plans to remove an additional 469 agents. The task force and CMS efforts follow the expiration of COVID-19-era enhanced premium subsidies in December 2025 (Wall Street Journal, September 22).

Trump Administration’s GENEROUS Model Draws Nationwide Buy-In

On September 18, President Trump announced that all 50 states, DC, and Puerto Rico have applied to participate in the GENErating cost Reductions for U.S. Medicaid (GENEROUS) model, which will test a most favored nation (MFN) pricing framework aimed at lowering Medicaid drug costs. States have until September 30 to finalize their participation decisions. Through the model, participating pharmaceutical manufacturers will provide rebates to state Medicaid programs for outpatient drugs. The Council of Economic Advisers (CEA) estimates the model will generate $36.6B in savings for the federal government and $27.6B for state governments over a 10-year period. A recent study by the Urban Institute, however, found that savings from MFN pricing would vary widely by state depending on whether they already have supplemental rebate agreements in place\ Consumer groups point out that key details remain unknown, including which drugs will be covered, pricing terms, and manufacturer participation (White House, September 18; Inside Health Policy, September 18; CMS, September 18; Health Payer Specialist, September 21).

CMS Adds Provider Payments to ACCESS Model

CMS is adding a new co-management payment to the ACCESS model for eligible Medicare Part B practitioners who review patient progress reports and coordinate care. The new payment comes as CMS expands ACCESS beyond traditional Medicare, with Medicare Advantage, Medicaid and private insurers agreeing to use similar outcomes-based payment approaches for technology-supported chronic care. Participating insurers include Blue Shield of California, Cigna, CVS Health and UnitedHealthcare.

Along with expanding payer participation, CMS is adding four clinical tracks for heart failure, chronic obstructive pulmonary disease, substance use disorders and nicotine dependence, which will join existing tracks focused on cardiometabolic conditions, depression and anxiety, and musculoskeletal pain. Under the new payment, practitioners can receive about $30 per review, plus $10 for initial onboarding and device setup, up to three times per year per beneficiary per track, with no beneficiary cost sharing. Eligibility for the payment will also extend to Federally Qualified Health Centers, Rural Health Clinics, and pharmacies beginning October 1 (Inside Health Policy, September 18).

Lawsuit Challenges Medicaid Work Requirement Exemption Rules

Medicaid enrollees and medical organizations are challenging how the federal government determines who qualifies for a medical frailty exemption from upcoming Medicaid work requirements. The lawsuit, filed September 18 in federal court in Maryland, argues that CMS’ June Interim Final Rule unlawfully restricts who can qualify for the exemption by requiring people with certain serious or chronic conditions to show that their condition significantly limits their ability to meet work or community engagement requirements. The individual plaintiffs are Medicaid enrollees from Illinois, Indiana, Kentucky, Missouri and North Carolina, while participating organizations include the American College of Physicians and American Academy of Pediatrics. Plaintiffs argue that the exemption and verification process could lead to coverage disruptions for people with conditions such as cancer, diabetes, HIV, substance use disorders and behavioral health conditions. The challenge comes as states prepare to implement the new requirements, which generally take effect January 1, 2027, and require certain adults to complete 80 hours per month of work, education, work programs or community service unless they qualify for an exemption (Stateline, September 21).

CMS Considers Next Steps on Medicaid Work Requirement Rule

CMS is reviewing more than 44,000 comments on its interim final rule implementing Medicaid work requirements as CMS considers next steps. The comment period closed July 31, and CMS said the feedback will inform its consideration of the rule, although CMS is not required to adopt changes requested by commenters. Stakeholders have raised implementation questions related to the medical frailty exemption, other exemptions, six-month renewals, and technology requirements. Several of those issues are also subject of litigation, with 25 states challenging provisions of the rule, including requirements related to the medically frail exemption. CMS has not indicated what, if any, additional rulemaking may follow, leaving several implementation details unresolved.

As CMS reviews comments, last week, the agency  outlined a three-tiered approach for states to use as they work to shape their medical frailty exemption policies ahead of the January 1 start date for community engagement requirements. Although states can set the ICD-10 codes in each tier, including the codes which automatically qualify someone for the exemption, behavioral health advocates note that states must also weigh the potential for CMS audits. As a result, states may adopt a more conservative approach to medical frailty exemptions, which advocates worry may lead to coverage losses for individuals with behavioral health conditions.

Meanwhile, HHS’ Office for Civil Rights sent OMB an FAQ on August 24 addressing confidentiality requirements for substance use disorder records and exceptions to Medicaid community engagement requirements for certain individuals with substance use disorders (Inside Health Policy, September 17; Inside Health Policy, September 18).

KFF Releases New Analysis on State Fiscal Conditions

A recent KFF analysis highlights a pattern of tightening state fiscal conditions within FY2027 Medicaid budgets. The study finds that both revenue and spending growth have slowed over the past two fiscal years: revenue growth fell to 2% in FY2026 from 5% in FY2025, while spending growth has eased significantly from its peak in FY2022. Both of these measures are projected to grow just 2% to 3% in FY2027. H.R.1 is expected to significantly reduce federal Medicaid spending, with the impact on states varying widely based on factors like expansion status or reliance on provider taxes and state-directed payments. With limited options to increase revenue and cut spending in other budgetary areas, states may instead look to further tighten Medicaid provider reimbursement rates, eligibility, or general benefits in an attempt to close the gap (KFF, September 18).

Sellers Dorsey will release its detailed FY2027 budget profiles in the coming weeks that provide budget breakdowns for state agencies, including key highlights related to Medicaid, education, child and family well-being, workforce, and more. New, additional enhanced analysis comparing FY2027 to FY2026 will be available through a new Sellers Dorsey offering. Be the first to know by reading the Digest in the coming weeks.