April 24, 2025

CMS has submitted a proposed regulation to the Office of Management and Budget for review that may signal an overhaul of financing mechanisms that allow states to draw more Medicaid funding from the federal government. Regulators sent a regulation titled “Preserving Medicaid Funding for Vulnerable Populations — Closing a Health Care-Related Lax Loophole” to the OMB. That loophole could be state directed payments, which allow states to make supplemental payments for services covered in Medicaid managed care contracts.

Arkansas Governor Sarah Huckabee Sanders signed a first-of-its-kind law last week preventing pharmacy benefit managers from owning or operating pharmacies, as states increasingly move to restrict controversial business practices of the powerful drug middlemen. The legislation was decried by PBMs, which say it will impede pharmaceutical access in the state. Other states, like Vermont, Texas and New York, could follow suit.

This draft budget signals a major shift in federal health priorities, with potential cuts to rural health programs, mental health services, and biomedical research. While not yet approved by Congress, the scope of the proposal could have significant implications for public health and the healthcare workforce.

Elevance is seeing higher costs but is managing them with premium increases and Medicaid rate adjustments. However, the company is staying cautious for the rest of 2025 as it monitors ongoing trends and member changes.

Walgreens will have to pay an additional $50 million if the drugstore chain is sold, merged or transferred before 2032. Last month, the company entered a deal to be acquired by private equity firm Sycamore Partners.