Week in Washington – 1/29/26

Annual Notice and Medicare Advantage

CMS released the 2027 Medicare Advantage Annual Notice. The proposed rule would make major changes to the types of diagnoses that could be included in risk adjustment. CMS estimates that the changes would reduce Medicare spending by $7 billion in 2027. The proposed rule includes an average increase of less than 0.1%, well below the industry expectation of 4% to 6%.

CMS and Drug Negotiations

CMS announced the third cycle of 15 prescription drugs selected for negotiation under Medicare Part D and, for the first time, Medicare Part B. The third cycle of drugs selected will be negotiated on in 2026 and the results of those negotiations will be effective on January 1, 2028. Notable drugs selected for negotiations were Botox , an HIV drug (Biktarvy, and arthritis treatment (Xelijanz). You can see the full list here.

Congress

• The Senate appears to be at a logjam over passing a budget to avoid a partial shutdown. The major sticking point is around funding for the Department of Homeland Security/ICE. Congress has until the end of the month to pass a bill(s). HHS is one of the agencies that would be impacted if there’s a shutdown.

• It should be noted that attached to the current budget bill is PBM reform.

• Discussions are (still) ongoing over potential ePTC extension. All permutations of ePTC being extended to date include CSR funding.   

HHS Watch

• Modern Healthcare was reporting that providers were having trouble with CMMI’s WISeR model, which institutes prior authorization on fee for service Medicare in select demonstration areas.

• Several major proposed rules from HHS including the 2027 Payment Notice, the regulations on Medicaid taxes, and interoperability issues related to prescription drugs are under review at OMB and are expected to be released in the coming weeks/months.