May 22, 2025

Twenty-three states and Washington, D.C. have sued the HHS over the cuts and this marks the second win for states.

This announcement is among several government actions aiming to enhance accountability and payment accuracy in Medicare Advantage.

A recent paper in The New England Journal of Medicine described the U.S. regulatory framework as the world’s “most aggressive” and proposed a more nuanced approach based on age and individual risk.

Drugmakers contend that shifting to a rebate model would allow them to verify that both hospitals and patients using 340B drugs meet eligibility requirements. But providers warn that this change would force already financially strained safety-net hospitals to front large payments—potentially threatening their ability to serve vulnerable populations.

The proposed changes pose significant risks for payers facing reduced enrollment and higher administrative burdens, while beneficiaries could see increased premiums, stricter eligibility requirements, and greater risk of losing coverage.