Medicare Medicaid Programs

Medicaid financing pressure intensified as OBBBA limits on state-directed payments are expected to reduce hospital SDP funding across 37 states, threatening a major supplemental revenue stream that many safety-net systems and Medicaid managed care strategies rely on to support access, care coordination, and value-based contracting infrastructure (HFMA). At the same time, Indiana’s move to cover GLP-1 obesity drugs through the federal BALANCE Model signals the Trump administration’s CMS is using Medicaid demonstrations to test high-cost population health interventions, creating near-term actuarial, pharmacy management, and outcomes-measurement challenges for states and MCOs (Open Minds). Together, these developments sharpen the core VBC tension: states and plans are being pushed toward more accountable, outcomes-oriented Medicaid models while facing tighter hospital funding, stricter budget neutrality, and rising specialty drug costs.