"We suffered one blow in a district court in litigation. We are undeterred. We are proceeding forward. We are fully committed to work requirements and community participation requirements in the Medicaid program."—Alex M. Azar II, Secretary of Health and Human Services

The Trump administration is proposing to restrict an innovation in the Affordable Care Act (ACA) that was intended to improve Medicare and slow spending in the vast federal insurance system for older Americans. Health care researchers have hailed the model's promise to improve quality and efficiency, but government data suggest it is not saving enough money. The changes, announced Thursday by the administrator of the Department of Health and Human Services' Centers for Medicare and Medicaid Services, would significantly curtail accountable care organizations (ACOs). The ACOs can be teams of doctors, hospitals, or other providers who become responsible for all the health care needs of a specific group of patients. (Amy Goldstein, Washington Post)

Efforts to allow health insurers to market short-term medical plans as a cheap alternative to the ACA are already running into headwinds, with state insurance regulators resisting the sales and state governments moving to restrict them. State insurance regulators, gathered over the past three days for a meeting of the National Association of Insurance Commissioners, expressed deep concern that short-term plans were being aggressively marketed in ways likely to mislead consumers. Many said the plans, which need not comply with the ACA's coverage mandates, were a poor substitute for comprehensive insurance. (Robert Pear, New York Times)

Government spending on Obamacare premiums has raced past its per-person spending on Medicaid expansion, and the gap is poised to increase—a trend that has some policy experts shaking their heads over the long-term economic picture and at least one major insurer questioning the sustainability of the individual market. This year, federal dollars going to exchange premium subsidies more than doubled from 2014 and the Congressional Budget Office projected they will nearly double again over the next decade. States are pursuing reinsurance waivers and even eying further expanding Medicaid—where the federal government shoulders nearly all the cost—through a public option to lower expenses for the people covered through the exchanges. But congressional gridlock over the ACA's future will likely drive the cost trend forward. (Susannah Luthi, Modern Healthcare)

Trump administration officials, whose push to impose work requirements on Medicaid beneficiaries was dealt a blow by a federal judge in June, say they have found a way around the ruling and will continue to allow states to put the restrictions in place. The judge, James E. Boasberg of the Federal District Court in Washington, stopped a Kentucky plan to introduce the work requirements after finding that the secretary of health and human services had failed to consider the state's estimate that the new rules would cause 95,000 low-income people to lose Medicaid coverage. Limiting access to medical assistance does not promote the objectives of the Medicaid program, he said. But administration officials said they could sidestep the ruling by providing a better explanation of the rationale for work requirements. The officials have a narrow reading of Judge Boasberg's decision, saying he faulted them for failing to follow proper procedure. They can satisfy his concerns, they say, by compiling a fuller record and showing that they have thoroughly reviewed the evidence. (Robert Pear, New York Times)

Three months after President Donald Trump announced his blueprint to bring down drug prices, administration officials have begun putting some teeth behind the rhetoric. Many details have yet to be announced. But experts who pay close attention to federal drug policy and Medicare rules say the administration is preparing to incrementally roll out a multipronged plan that tasks the Centers for Medicare and Medicaid Services (CMS) and the Food and Drug Administration with promoting competition, attacking the complicated drug rebate system and introducing tactics to lower what the government pays for drugs. Broadly, the strategy falls under a handful of steps: 1. Attacking the Rebates:  2. Bringing More Negotiation to Medicare: 3. Paying for Value: 4. Tackling Foreign Drug Costs: 5. Increasing Competition. (Sarah Jane Tribble, Kaiser Health News)

CMS will allow Medicare Advantage plans to require that patients try low-cost generics before stepping up to more expensive therapies. Late Tuesday, the CMS announced that Medicare Advantage (MA) plans can now impose step therapy on Part B drugs. Step therapy allows a plan to determine whether patients should first get a low-cost generic and then work their way up to a more costly product if the initial treatment is ineffective. MA plans already have this authority for Part D drugs, which are drugs provided at pharmacies. This latest move allows prior authorization for drugs administered in doctors' offices. Officials at CMS said step therapy could lower drug costs by incentivizing drugmakers to have the least expensive drugs available as the first option. Last year, MA plans spent $11.9 billion on Part B drugs. (Virgil Dickson, Modern Healthcare)

Drugmakers will be required to negotiate on prices for more medications paid for by Medicare, the latest step in the Trump administration's campaign to rein in prescription costs. Starting next year, private insurers that provide coverage to about 20 million seniors through Medicare Advantage will get new powers to bargain over drugs administered in doctor's offices or hospitals, Health and Human Services Secretary Alex Azar said Tuesday in an interview with Bloomberg. Currently, such drugs are paid for at their cost, plus a percentage fee for doctors, under what's known as Medicare Part B. (Anna Edney, Bloomberg News)