Navigating The Trump Administration Health Policy Shifts: What Medicaid MCOs Need to Know
The return of President Donald Trump to the White House has ushered in a wave of executive orders aimed at undoing key health care policies from the Biden administration. One of the most impactful orders rescinded Biden’s Executive Order 14087, which was designed to lower prescription drug costs for Medicaid beneficiaries. The rollback of this initiative has sparked confusion among MCOs, policymakers, and health care executives alike.
The Rescission of Biden’s Drug Pricing Order
Biden’s 2022 order directed the Department of Health and Human Services (HHS) to develop new models for lowering drug prices through the Center for Medicare & Medicaid Innovation (CMMI). Among the initiatives being explored was a $2 monthly cap on generic medications, as well as strategies to enhance value-based payment structures. With Trump’s action to rescind this order, questions have emerged about the administration’s commitment to addressing high prescription drug costs.
For Medicaid MCOs, this rollback could affect cost-containment strategies and access to affordable medications for beneficiaries. While the rescission halts the development of pilot programs, core provisions of the Inflation Reduction Act—such as the $35 monthly cap on insulin—remain intact.
The Impact on Medicaid Drug Pricing
Trump’s executive orders signal potential changes to Medicaid’s approach to drug pricing and reimbursement. The Biden administration had encouraged states to negotiate lower drug prices through bulk purchasing agreements and innovative payment models. With the rescission of Biden’s order, these efforts may be deprioritized or abandoned, leaving MCOs uncertain about future cost-containment strategies.
Additionally, the Trump administration may pursue policies that shift more financial responsibility to states, potentially reducing federal support for Medicaid prescription drug coverage. This could lead to changes in rebate structures, preferred drug lists, and formulary management, requiring MCOs to reassess their strategies.
Broader Implications for Medicaid MCOs
Trump’s broader executive actions signal a potential rollback of Biden-era health care policies beyond drug pricing. His orders included halting Medicaid expansion efforts, rescinding guidance on gender-affirming care, and initiating reviews of administrative regulations that could lead to Medicaid funding cuts. For MCOs, these shifts could impact enrollment, reimbursement models, and coverage mandates.
Key questions for Medicaid MCOs include:
Will the Trump administration introduce alternative measures to control Medicaid drug costs?
Could regulatory actions alter Medicaid managed care financing or risk adjustment models?
How will states respond to potential Medicaid funding changes or new federal directives?
Staying Ahead
As regulatory reviews unfold, Medicaid MCOs must stay informed and proactive in adapting to policy changes. The extent to which Trump’s administration prioritizes Medicaid adjustments and drug pricing reforms remains unclear, but MCOs should prepare for shifts that could affect plan operations and beneficiary coverage. Engaging with policymakers, monitoring federal guidance, and collaborating with state agencies will be essential in navigating this evolving landscape.
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Sources:
Association of Health Care Journalists. Clearing Up Confusion on Drug Price Rules and Revisions. January 2025.
Morgan Lewis. Trump Executive Order Signals Drug Pricing Reforms Likely on the Horizon. January 2025.
American Journal of Managed Care (AJMC). Trump Reverses Some Biden Drug Pricing Initiatives, Potentially Impacting Medicare Costs. January 2025.
Healthcare Dive. Trump Reverses Biden Healthcare Executive Orders, Withdraws from World Health Organization. January 2025.
NPR. Trump Executive Orders and Actions on Health Care. January 2025.