Medicare and Medicaid will not cover weight loss drugs, Trump administration decides
The Trump administration has decided against implementing a proposal for Medicare and Medicaid to cover
weight loss drugs
, the Centers for Medicare and Medicaid Services said
in a filing
published Friday by the agency.
A CMS spokesperson said the agency now believes that finalizing the proposal "is not appropriate at this time."
"CMS may consider future policy options for AOMs pending further review of both the potential benefits of these drugs including updated clinical indications, and relevant costs including fiscal impacts on stakeholders such as state Medicaid agencies," Catherine Howden, the spokesperson, said in an email.
Medicare already covers drugs that are also widely used for weight loss, like Ozempic and Mounjaro, when they are prescribed by doctors for other reasons like managing diabetes.
But under the statute governing Medicare and Medicaid, the federal government is generally banned from covering drugs "when used for weight loss."
Under the Biden administration, CMS had
proposed
to reinterpret this statute, bypassing the Congressional ban on coverage of weight loss drugs for obese, but not overweight, patients.
Since
obesity
is now widely agreed to be a disease, the Biden administration had said, treatment of that disease should be covered by Medicare's Part D prescription drug benefit.
They pointed to other situations when these kinds of drugs are allowed to be covered, like when weight change is caused by AIDS.
Expanding coverage of anti-obesity medications this way would also affect state Medicaid plans, officials said, since they are governed by the same law.
"CMS' revised interpretation would recognize obesity to be a chronic disease based on changes in medical consensus," the agency had said
last year
.
The proposal was expected to be costly for the federal government.
The Congressional Budget Office had
previously estimated
that expanding Medicare coverage to anti-obesity medications could add up to $35 billion over the next decade, even after factoring in expected savings from improved health of beneficiaries.
Medicaid programs would also have shouldered billions more in costs to cover the medications, Biden administration officials acknowledged, split between the federal government and states.
"States are also feeling substantial state budget pressure and we are doing our part to make sure patients, Medicaid enrollees all across the country can get access," Dan Tsai, the agency's top Medicaid official under the Biden administration, had told reporters.
Top advisers to Health and Human Services Secretary Robert F. Kennedy Jr., who now oversees CMS, among the nation's federal health agencies, had criticized the Biden-era move.
Healthcare entrepreneur Calley Means, now a special government employee under Kennedy,
had called it
a "betrayal of any American who cares about" the
Make America Healthy Again
movement's principles.
"Americans did NOT vote for mass injections in this election. They voted for a shift to ROOT CAUSE interventions and benefit flexibility," Means said in a
post on X
at the time.
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The Wyoming Hospital Upending the Logic of Private Equity
The Atlantic Daily, a newsletter that guides you through the biggest stories of the day, helps you discover new ideas, and recommends the best in culture. Sign up for it here. After years of trying to improve his hospital in Riverton, Wyoming—first as a doctor, then as a board member and volunteer activist—Roger Gose was ready to give up. Gose, a Texas native, had been in Wyoming since 1978, when he saw an ad in a medical journal looking for a small-town internist. Ever since he was a kid, he had wanted to be a community doctor, the kind who made house calls and treated his neighbors from birth into adulthood. He found his calling in Riverton, a town of 10,000 people in one of the state's poorer counties. For 35 years, he ran a private practice and worked shifts at Riverton Memorial Hospital, even serving for a time as the chief of medicine there. After retiring from his practice in 2012, he joined the hospital board, still eager to do whatever he could to help. 'You want to leave a place better than you found it,' he told me. And for a long time, he felt like he had. But that was before LifePoint Health, one of the biggest rural-hospital chains in the country, saw his hospital as a distressed asset in need of saving through a ruthless search for efficiencies, and before executives at Apollo Global Management, a private-equity firm whose headquarters looms above the Plaza Hotel in Midtown Manhattan, began calling the shots. That was before Gose realized that, in the private-equity world, hospitals were just another widget, a tool to make money and nothing more. In late 2018, Gose and a group of his neighbors decided that trying to save their hospital was futile. It had already lost its maternity ward, leaving pregnant people to drive nearly 30 miles to deliver a baby. Data from the Wyoming Department of Health show that the number of air-ambulance flights from the county where Riverton sits to hospitals elsewhere in the state rose from 155 in 2014 to 937 in 2019. By the time I spent several days with Gose and a dozen other Rivertonians in the spring of 2023, they didn't even have a hospital anymore, they told me; they had a 'Band-Aid station.' The only way to ensure that their town had a real hospital, they decided, was to build one themselves. The conventional wisdom about rural hospitals in the 21st century is that they are, in a word, screwed. Young people move away; older residents left behind need more expensive care and are less likely than urban and suburban residents to have private insurance, which is more lucrative for providers than Medicare and Medicaid. A 2018 report from the U.S. Government Accountability Office found that twice as many rural hospitals closed from 2013 to 2017 than in the five years prior, and the ones that remained were in much worse financial shape than their nonrural counterparts. Emergency funding during the coronavirus pandemic improved the financial health of rural hospitals, but after that funding dried up, many were left facing labor shortages and supply-chain problems that increased prices. House Republicans' proposed cuts to Medicaid could drive even more hospitals out of business, the American Hospital Association argued in a letter to congressional leaders this April. The ability to stave off closure has been the chief value proposition that private-equity firms offer to rural hospitals. In my reporting on private equity's growing dominance in health care, I heard versions of the story that LifePoint and Apollo told Riverton residents again and again: Without us, you will be left with no hospital at all. Yours is running out of money, and our ability to consolidate and find efficiencies across our ever-growing system is the only thing that can keep it alive. Your community is too small and poor to support an obstetrics department, or general surgery, or mental-health services, so you won't have those anymore, but isn't something better than nothing? Accepting that private equity is the only option for rural hospitals, though, requires accepting that rural Americans deserve less access to care than their urban and suburban counterparts, and that the care they do receive will be measurably worse. A landmark 2023 study found that in the three years after a private-equity acquisition, the rate of serious preventable medical complications increased significantly. (LifePoint hospitals were not included in the study, which focused on acquisitions made before 2018.) Patients were more likely to fall in the hospital and more likely to acquire infections at the site of a surgical incision. The number of central-line infections, which often result from improper insertion or cleaning, rose 38 percent. Though the study didn't delve into the reasons for the increases, the implication was clear: Focusing on short-term profits was leading to cost cutting that could be dangerous for patients. In Riverton, the hospital's owner was cutting costs aggressively, while also raising prices. In 2014, LifePoint formally merged the hospital with one in wealthier Lander, a town 25 miles away, and renamed them SageWest Riverton and SageWest Lander. In 2017, the year before Apollo bought LifePoint, researchers examined hospital data for 14 individual Wyoming facilities and found that SageWest charged the highest relative prices; data from 2020 show that SageWest maintained the largest price disparity of any general hospital in the state after the Apollo acquisition. (LifePoint referred questions about the Riverton and Lander hospitals to SageWest; SageWest leaders did not respond to several requests for comment.) At the same time, the Riverton hospital was shrinking. In quick succession, SageWest suspended its obstetrics services, closed its inpatient mental-health unit, and shrunk other basic services. By 2022, the last year for which Centers for Medicare and Medicaid Services data are available, SageWest employed 227 people across its two campuses, nearly 40 percent fewer than before the Riverton-Lander merger. According to Gose, the number of physicians based in Riverton had dwindled from 20-something to just seven. If they were going to build a new hospital, Gose and his neighbors first needed to know whether it could theoretically be financially viable. By 2018, they had formed a nonprofit, Riverton Medical District, and one of the board members, Vivian Watkins—the former head of commercial lending for U.S. Bank's 14 branches across Wyoming, and the kind of person who can't leave the grocery store without stopping four times to ask about someone's kids or their neighborhood drama—began cold-calling hospital CEOs across Wyoming, looking for advice on where to start. One told her that she should go straight to Stroudwater Associates, a Maine-based consultancy with a specialty in rural-health-care finances. The Riverton nonprofit was not Stroudwater Associates' typical client. The company's chairman, Eric Shell, and his team usually work directly with rural hospitals, or occasionally with a larger chain looking for system-wide strategic planning. Gose, Watkins, and their allies didn't have a hospital, didn't have concrete plans for a hospital, didn't even have any money for a hospital. Still, Shell was intrigued by the brazenness of what they were dreaming up. After nearly 30 years working with rural hospitals, Shell believed that rural hospitals could survive, but that too few hospital executives think creatively about solutions. Over and over, he's seen cuts damage a hospital's business further: 'You win the battle, but you lose the war,' he told me. Instead of cutting costs by 'doing more with less' (to use the corporate jargon for layoffs and overworking employees), making rural hospitals run in the 21st century means increasing profits by expanding a hospital's business. One of Shell's go-to examples is Mahaska Health in Oskaloosa, Iowa, a nonprofit hospital in a city slightly bigger than Riverton. When the pandemic hit in 2020, hospitals across the country were overwhelmed with critically ill COVID patients, but also saw a decline in other types of cases. The result was a huge, unexpected loss of revenue for many hospitals, and a correspondingly huge number of layoffs: 1.4 million health-care workers lost their jobs in April 2020 alone. At Mahaska, though, CEO Kevin DeRonde—a former NFL linebacker—ran in the opposite direction: He hired many of the providers who had been laid off from other area hospitals, Shell said. His hospital took a short-term financial hit, but DeRonde wagered that patient volume would recover once the worst of the pandemic eased up. The bet paid off. After the drop in 2020, the number of non-COVID patients skyrocketed. Now many hospitals were understaffed, but not Mahaska. The hospital hadn't been doing well even before the pandemic, losing more than $5 million in 2017. By 2023, it made $7.5 million in net income, according to Shell and Mahaska Health officials. Growth, though, is more difficult at hospitals owned by private-equity firms, because of the need to keep shareholders happy through quick returns. 'When I look at what they're doing in Lander and Riverton, I shake my head and say, 'That's not the way I'd be running the company,'' Shell told me. 'But I'm not running the company, and they're driven by an external force. If they're not beating the market rate of compensation for their investors, their investors are going to walk.' Shell agreed to conduct a feasibility study for Riverton Medical District, and Stroudwater spent months digging into every aspect of Riverton's economy, population, and existing health-care options. Just 44 percent of Medicare recipients in the area who needed hospital treatment got it at either Riverton or its sister hospital, leaving an opening for a new hospital to quickly capture market share. The presence of the Wind River Reservation, which surrounds Riverton, boosted the financial case: The Eastern Shoshone and Northern Arapaho Tribes, which share the reservation, both provide private insurance to their members. In June 2019, Shell's firm handed over its report. Its takeaway: The area had the ability to 'support a financially viable rural health system with a range of medical, surgical, and specialty services.' The Riverton Medical District team had the answer they wanted, from a company with real bona fides in the rural health-care world. Gose and Watkins were jubilant. They were going to build a hospital—if they could find the money, that is. Friends and neighbors had banded together to cover the $150,000 Stroudwater study, but a whole new hospital was going to cost tens of millions. Shell didn't think they could pull it off. He told them so outright. He's an accountant, which means always assuming the worst. He couldn't fathom why a bank or a government would give Riverton Medical District a loan, considering the competition risk. The group, though, was unanimous: Shell's fears weren't going to stop them. They were the ones who lived there; they were the ones who, in Gose's words, felt an obligation to leave Riverton better than they found it. After months of looking into every other source of funding they could think of, Riverton Medical District turned to what the group considered the 'lender of last resort'—the U.S. Department of Agriculture, the primary government funder of projects affecting rural Americans. A community hospital in an underserved rural area fit the portfolio, which could qualify Riverton Medical District for low-interest loans. Applying for government money, however, required navigating government bureaucracy. In an email exchange that stretched over months, the USDA rural-development regional director for Wyoming, Lorraine Werner, was encouraging but exacting. Every time Werner needed more documents, including a third-party audit that cost an additional $50,000, the group would scramble to get them to her. Then she would ask for even more. It took Riverton Medical District more than a year to have its application accepted—not for funding, just for consideration. Yet somehow, Riverton residents never seemed to grow tired of what looked to many outsiders like a quixotic scheme. To house the hospital, the Eastern Shoshone Tribe agreed to sell eight acres on the north end of town and donated four more acres outright. People kept handing over money, frequently $5 or $10 at a time. Finally, after an application process that took nearly two years, USDA announced its ruling. The federal government agreed that a new hospital in Riverton could be financially viable, committing to fund the lion's share of the costs—more than $37 million. It was the largest USDA rural-development loan ever awarded in the state of Wyoming. The money would fund a hospital offering every routine service Rivertonians had lost. It would have 13 inpatient beds, a full surgical department, two labor-and-delivery rooms, two rooms equipped for intensive care, and space for physical and speech therapy. It would be staffed to perform surgery and deliver babies 24 hours a day. And the building would be designed to accommodate future growth, with the potential to add 11 new patient rooms, additional surgery space, and more parking, board members told me. In its report, USDA was more bullish than Shell and Stroudwater had been; the agency's official assessment of the project barely referenced the threat of competition from the existing hospitals. Citing numbers provided by the Riverton Medical District board, USDA found that the hospital could break even with just 30 percent market share, far less than SageWest's 44 percent. The Riverton Medical District project, evaluators wrote, had generated a remarkable level of local support; the agency noted donations from individuals and businesses that added up to more than $1 million, and more than 200 letters of support. Several of the letters said that without a new hospital, they would move out of Riverton. Multiple business owners wrote that the lack of a fully functioning hospital left them unable to recruit and retain workers. Most of the USDA report was written in bureaucracy-speak, but at one point the author slipped into first person: 'The applicant started a true grassroots movement to bring back essential services to the community and has exhibited a level of community support, both monetarily and otherwise, that is unseen in my experience.' In December 2024, just before the soil froze for the season, work crews broke ground on Riverton's new community hospital. In early June, 400 people turned out for a community celebration, cheering for state-government officials and Riverton Medical District board members and signing a beam that will be installed into the new facility. Building a new, locally owned hospital isn't a scalable way to help every community where hospitals owned by private-equity firms are providing less health care. The particular combination of ingredients in Riverton Medical District's recipe baked into something resembling a miracle. But to Gose's mind, following Riverton's example doesn't require building a community hospital in every rural county in the country. What it requires is people with knowledge of, and investment in, one specific community making decisions for that community—the exact opposite of the private-equity ethos of consolidation at all costs. 'Often you'll see a lot of people get excited and involved in something for two or three months or six or whatever, but then they get disillusioned and quit,' Gose told me. 'And I think that's what LifePoint thought we were doing. And they underestimated that failure was not an option.' This article has been adapted from Megan Greenwell's forthcoming book, Bad Company: Private Equity and the Death of the American Dream. Article originally published at The Atlantic
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