CMS Launches Medicaid Fraud Crackdown as Insurers Opt Out of Medicare Weight Loss Drug Pilot

This directive was announced at a health care summit, where the CMS administrator emphasized that states must address the issue regardless of political affiliation. Failure to comply could lead to more aggressive federal oversight.

The campaign includes sending formal requests to every state this week. In February, CMS temporarily withheld $259.5 million in payments as part of related efforts. The initiative follows a broader push against fraud, with the vice president leading the administration's efforts. CMS stated that non-compliant states would indicate a need for intensified audits.

“We’re asking the states to own that problem red and blue, all of them. If you don’t take it seriously, it indicates to us that we might have to take the audits more aggressively.”

Health insurers have declined to participate in a Medicare pilot program aimed at providing discounted weight loss drugs to seniors. The program, known as BALANCE, was intended to test whether covering obesity medications could save money or improve health outcomes without additional costs.

Last year, the administration negotiated a deal with Eli Lilly and Novo Nordisk to reduce prices of their obesity drugs to $245 per month in Medicare and Medicaid, with beneficiaries paying $50 monthly. Medicare is generally prohibited from covering weight loss drugs, but the pilot proposed waiving this restriction.

Due to insurers' refusal, citing potential financial strain, the government will now cover the drugs outside the Medicare Part D benefit. CMS plans to maintain low copays for seniors through 2027 by funding the program differently.

The pilot required insurer participation, but their decision not to join has shifted the funding mechanism. The drugmakers agreed to the discounted pricing in exchange for expanded access in both Medicare and Medicaid programs. STAT reported that the administration had planned for insurers to provide the drugs through the pilot.

With this change, the government will directly manage coverage to ensure beneficiary access. Benzinga noted the fraud crackdown aligns with a State of the Union declaration on combating fraud. The withheld payments in February targeted specific compliance issues.

No contradictions appear across sources regarding the fraud initiative or pilot details. Both efforts aim to address costs and access in federal health programs.