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Hello, diligent HCI readers! I hope everyone enjoyed their Memorial Day weekends. We’ve got a lot of numbers in today’s edition. Get out your abacus. And tell me if you want more or less math in here: bob.herman@statnews.com.

$775 billion

Centers for Medicare and Medicaid Services

Republicans’ recent tax law targets supplemental Medicaid funds that have increasingly propped up hospitals. The cuts are expected to be even bigger than originally forecast, which almost assuredly will provoke an opposition campaign from hospitals.

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Hospitals and other providers are bracing for an end to the extra money they’ve gotten for treating Medicaid patients, one of the many cuts contained in Republicans’ sweeping 2025 tax law.

But the Trump administration disclosed this week that it plans to take the cuts to state directed payments even further, setting up what’s likely to be a showdown with provider groups. 

Since 2024, some hospitals, doctors, nursing homes, and other types of providers have been reimbursed for Medicaid services at much higher commercial rates, thanks to a Biden-era change. The One Big Beautiful Bill Act, passed in July, directs the Centers for Medicare and Medicaid Services to gradually trim those payments beginning in 2028 until they’re close to or on par with Medicare rates. 

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NEW YORK — President Donald Trump’s administration this week acknowledged it made a significant error in figures it used to help justify a fraud probe into New York’s Medicaid program, a glaring mistake that undercuts a federal campaign to tackle waste, mostly in Democratic-led states.

The error, one of at least a few misrepresentations in its description of the program, prompted health analysts to question how many of the Republican administration’s sweeping anti-fraud efforts around the country were based on faulty findings. It also reflected a common criticism that’s been made of Trump’s second administration — that it tends to attack first and confirm the facts later.

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Zac Jiwa, a federal Medicare official, delivered a eulogy of sorts at a Thursday Medicare event highlighting the successes of the Health Tech Ecosystem initiative. 

The eulogy’s subject? The clipboard. 

For the past eight months, hundreds of health tech companies have been working to meet goals set out by the federal government to make patient records more portable, create systems that import patients’ data into providers’ electronic health records systems, and stand up various patient apps. The idea is to make filling out a stack of paperwork at every doctor’s visit, on that ubiquitous clipboard, a thing of the past.

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You’re reading the web edition of D.C. Diagnosis, STAT’s twice-weekly newsletter about the politics and policy of health and medicine. Sign up here to receive it in your inbox on Tuesdays and Thursdays.

In which RFK Jr. says the “government lies to us” while sitting in front of an HHS seal. Send news tips and podcast recommendations to John.Wilkerson@statnews.com or John_Wilkerson.07 on Signal.

First, control health care costs

Last month, a group of 12 Senate Democrats proposed a framework for rebuilding the health care system. The idea was to spur input from others ahead of when Democrats might get a chance to act on those plans.

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You’re reading the web edition of D.C. Diagnosis, STAT’s twice-weekly newsletter about the politics and policy of health and medicine. Sign up here to receive it in your inbox on Tuesdays and Thursdays.

The 2026 STAT Madness competition was stacked with research on topics like smart dental floss that monitors stress, Baby KJ’s personalized gene therapy, and an artificial intelligence model designed to predict cell behavior. Check out the winner, unveiled this morning. And as always, send news tips to John.Wilkerson@statnews.com or John_Wilkerson.07 on Signal.

Budget reruns

The 2027 budget that the Trump administration released on Friday is in many ways a repeat of last year’s proposal: It includes deep cuts to the National Institutes of Health, the elimination of a health research agency, and the creation of a new agency devoted to chronic diseases called the Administration for a Healthy America.

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In medicine, we like to believe that progress is linear. That once a patient stabilizes, regains lost skills, and returns to work, the hardest part is behind them. But in addiction care, stability is fragile because the systems supporting patients are weak.

Recently, I sat with a patient who has done everything we ask of people in recovery. She has been abstinent for years. She attends visits. Her urine drug screens are consistently appropriate. She works. She parents. She plans for the future. And yet, halfway through our appointment, her voice changed, not when we discussed cravings or trauma, but when she told me her insurance premium was about to triple.

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Companies that sell Medicare Advantage plans will receive a 2.5% pay bump on average in 2027, up significantly from what was proposed and a win for an industry that has experienced higher medical costs and has opposed nearly all reforms to the lucrative taxpayer-financed program.

More importantly, the Trump administration scrapped a proposal that would have used more updated data in the payment process, ensuring that Medicare Advantage insurers retain billions of dollars.

The finalized rate is estimated to add $13 billion in revenue next year for insurers, according to the Centers for Medicare and Medicaid Services. During trading after the markets closed, the stock prices of UnitedHealth Group, Humana, and CVS Health each climbed by more than 8%. Those companies are the three largest Medicare Advantage insurers, and together cover almost 60% of all people enrolled in the program.

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Well hullo! You think you can get the last word, literally, with AI? Think again. There’s always human interaction available here: bob.herman@statnews.com.

Today’s the day

By law, the 2027 Medicare Advantage payment regulation must come out today. It will set the tone for how the Trump administration wants to work with the health insurance industry: as the “new sheriff in town” or just another friendly regulator.

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