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Twice-Weekly Briefing
Tuesday, August 4, 2026
Issue 260804-52
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The MOC Brief
Health policy, priced and translated for self-funded plan sponsors
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In This Edition
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CMS finalizes a 2.3 percent FY 2027 hospital update and makes joint replacement bundles mandatory nationwide in 2028. | | 2. |
Senate Finance opens a formal record on third-party administrators, prior authorization, and employer access to claims data. | | 3. |
HRSA restarts the 340B rebate pilot with manufacturer plans due August 24 and a January 1, 2027 effective date. | | 4. |
The Senate HELP Committee advances a bill extending privacy rules to health apps, wearables, and other non-HIPAA vendors. | | 5. |
Medicare Advantage plan exits are set to displace roughly 600,000 members, with more carriers expected to follow. |
Five developments from the past week that change what you should be asking your vendors before 2027 renewals close.
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01
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HOSPITAL PAYMENT
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July 31, 2026
CMS Sets a 2.3 Percent Hospital Update and Makes Joint Replacement Bundles Mandatory Nationwide
CMS issued the FY 2027 Inpatient Prospective Payment System and Long-Term Care Hospital final rule on July 31. Inpatient rates rise 2.3 percent, built from a 3.2 percent market basket less a 0.9 percentage point productivity adjustment, and CMS expects the rule to raise hospital payments by roughly $2.1 billion. New technology add-on payments account for another $779 million. The rule also establishes CJR-X, a mandatory nationwide successor to the Comprehensive Care for Joint Replacement Model that starts January 1, 2028 and covers hip, knee, and ankle replacements in both inpatient and hospital outpatient settings.
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MOC Perspective
Your plan does not pay Medicare rates, but it should know them. Commercial prices for hospital services run well above the Medicare benchmark, and the gap is driven far more by local market power than by anything you would recognize as quality. That makes the FY 2027 rate the most useful reference point you will get this year for the same DRGs your members generate. Pull your top twenty inpatient DRGs by spend, express each allowed amount as a multiple of the new FY 2027 rate, and you have a defensible picture of where your contract sits. Joint replacement deserves separate attention. CMS is about to hold hospitals accountable for the full cost and quality of a joint replacement episode, inpatient or outpatient, and the data it generates will be public. Employers who already run bundled or centers-of-excellence arrangements for orthopedics will have a national comparison set. Employers who pay claim by claim will not.
What To Do Now
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Recalculate your top twenty inpatient DRGs as a percentage of the FY 2027 Medicare rate before your renewal meeting. | | ▪ |
Ask your TPA which hospitals in your network will fall under CJR-X and what episode data they will share. | | ▪ |
Add a contract clause requiring the plan to receive episode-level cost and outcome reporting for joint replacements. | | ▪ |
Compare your outpatient joint replacement allowed amounts against the inpatient equivalent to check for site-of-service drift. |
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Source: CMS
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02
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OVERSIGHT
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July 30, 2026
Senate Finance Opens a Formal Record on TPAs, Prior Authorization, and Employer Claims Data
Senate Finance Ranking Member Ron Wyden released a request for information on July 30 covering the private insurance market. Section 3 asks for proposals on anticompetitive practices used by third-party administrators and other middlemen owned by or affiliated with insurance companies, describing those practices as similar to what pharmacy benefit managers do. It also asks how to expand transparency and reporting requirements so that employers and consumers can obtain prices, claims, and other cost data. The document reports family-of-four employer coverage costs reaching $37,840 in 2026, up 53 percent since 2015. Written comments are due to insurance@finance.senate.gov by October 2, 2026.
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MOC Perspective
This is the first time a congressional record has named third-party administrators in the same breath as PBMs, and it arrives with an open comment docket. That matters for two reasons. First, the questions being asked are the questions you should already be putting to your own administrator: what compensation flows to you from parties other than the plan, and what claims data will you release without a fight. Section 202 of the Consolidated Appropriations Act already gives you the right to the first answer, and ERISA gives you the second. If your administrator cannot produce complete direct and indirect compensation documentation, the arrangement is a prohibited transaction, whatever Congress does next. Second, a plan sponsor who has actually run this exercise has something to submit. Comment dockets are shaped by whoever shows up, and the employers funding coverage for more than 160 million people are usually the quietest party in the room.
What To Do Now
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Request a complete CAA Section 202 compensation disclosure from your TPA, broker, and PBM in writing, with a response deadline. | | ▪ |
Review your administrative services agreement for any clause that limits, delays, or charges for claims-level data. | | ▪ |
Document the request and the response in your fiduciary committee minutes. | | ▪ |
Consider submitting a comment to insurance@finance.senate.gov before October 2 describing what data your vendors withheld. |
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Source: U.S. Senate Committee on Finance
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03
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DRUG PRICING
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July 31, 2026
HRSA Restarts the 340B Rebate Pilot With a January 2027 Effective Date
HRSA announced a revised 340B Rebate Model Pilot Program on July 31, published in the Federal Register on August 3. The pilot lets qualifying manufacturers deliver the 340B ceiling price through retrospective rebates rather than upfront discounts, limited to drugs subject to a maximum fair price. Manufacturers must submit rebate plans by August 24, 2026, for a January 1, 2027 effective date. HRSA puts the covered drugs at less than 5.5 percent of total 340B sales, with the rest continuing under upfront discounts. This is HRSA's second attempt. A federal court in Maine blocked the original version days before its January 2026 launch, a federal appeals court declined to lift that order, and the pilot was vacated and remanded in February. Hospital groups say the revision understates the operational burden they documented across roughly 2,450 comments.
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MOC Perspective
Nothing in this notice speaks to your plan directly, which is exactly why it is worth reading. 340B governs what covered entities pay to acquire drugs. It says nothing about what they may bill you. That gap is where employer money goes. The same injectable or infused drug billed under a J-code in a hospital outpatient department can run 200 to 400 percent above what a physician office charges, and a 340B hospital acquiring that drug at a discount is under no obligation to pass any of it through. A shift from upfront discounts to retrospective rebates adds a settlement lag to hospital drug economics, and organizations under margin pressure tend to look for the difference somewhere. Your medical benefit is the softest place to find it. Run your J-code spend by place of service now, before the January effective date gives anyone a reason to reprice.
What To Do Now
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Pull twelve months of J-code claims and sort allowed amounts by place of service and facility. | | ▪ |
Flag any hospital outpatient department billing above 200 percent of the physician office rate for the same drug. | | ▪ |
Ask your TPA whether your contracts allow site-of-service redirection for infused and injectable drugs. | | ▪ |
Set a calendar reminder to re-run the same analysis in the first quarter of 2027 and compare. |
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Source: Federal Register
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04
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HEALTH DATA
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July 30, 2026
Senate HELP Advances a Privacy Bill Covering Health Apps, Wearables, and Other Non-HIPAA Vendors
The Senate HELP Committee met in executive session on July 30 and advanced S. 3097, the Health Information Privacy Reform Act, to the full Senate. Alston & Bird reported the vote as unanimous at 22 to 0. The bill would direct HHS, working with the Federal Trade Commission, to set privacy, security, and breach notification standards for health information held by entities outside HIPAA, including health apps and wearable technologies. It would establish individual rights to access, correct, delete, and port health data, require notice when information stops being HIPAA protected, bar the sale of protected health information without patient consent, and direct HHS to issue guidance on artificial intelligence and de-identified data.
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MOC Perspective
Count the vendors touching your members' health information that are not covered entities. Wellness platforms, digital coaching apps, navigation tools, biometric screening providers, wearable device programs, point solutions bought outside the medical plan. Many sit in a space where HIPAA simply does not reach, and the business associate agreement you assume is in place may not exist. That is a governance gap, not a legal technicality. Employees decide whether to use these tools based on whether they trust you with the data, and low participation is the most common reason a point solution fails to return anything. Fix the ownership question first: members own their data, the employer never takes possession at the individual level, and an independent platform aggregates before anything reaches you. Publish that policy and repeat it outside open enrollment. If S. 3097 becomes law, the plans that already run this way will have a compliance exercise. The rest will have a project.
What To Do Now
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Inventory every vendor touching member health data and mark which are covered entities or business associates. | | ▪ |
Request each non-HIPAA vendor's data retention, resale, and breach notification terms in writing. | | ▪ |
Write a plain-language data governance policy stating who owns member data and who can see it. | | ▪ |
Confirm that wellness and wearable participation incentives reward engagement without penalizing non-participation. |
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Source: U.S. Senate HELP Committee
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05
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COVERAGE DISRUPTION
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August 2, 2026
Medicare Advantage Exits Are Set to Displace Roughly 600,000 Members for 2027
Humana told investors on its July 29 earnings call that targeted plan exits for the 2027 benefit year will affect approximately 600,000 members, about 8 percent of its 7.2 million Medicare Advantage enrollees. CFO Celeste Mellet said the company will prioritize higher performing plans, including those with greater value-based care penetration, and expects to recapture a share of the affected volume as it did after its 2025 exits. Reporting on August 2 framed the announcement as the first signal of broader 2027 withdrawals, with other carriers expected to disclose exits in the coming weeks. Affected members will not learn their options until annual enrollment opens October 15.
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MOC Perspective
If you sponsor a group Medicare Advantage plan for retirees, this is an operational problem with a fixed deadline. Find out now whether your carrier's exits touch the counties where your retirees live, because a retiree who discovers the change during annual enrollment has ten weeks to solve it alone. The broader signal matters more. These exits exist because government funding is not keeping pace with medical cost trend, and carriers are responding by walking away from the least profitable geographies. Your commercial renewal is the same arithmetic pointed at you, and the levers available to a carrier are not available to a plan sponsor who cannot leave. What you can do is make sure disruption does not become abandonment. Members navigate change badly without help. Concierge outreach, a nurse line, and clear written comparisons are cheap next to the claims generated by someone who guesses wrong or stops filling a prescription.
What To Do Now
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Ask your group Medicare Advantage carrier this month whether your retiree counties are affected for 2027. | | ▪ |
Build a written comparison and outreach plan for affected retirees before October 15. | | ▪ |
Staff a live phone line for enrollment questions rather than relying on a portal alone. | | ▪ |
Track prescription fill continuity for any member who changes plans and follow up on gaps. |
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Source: Forbes
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The Bottom Line
Four of this week's five developments are about disclosure: what hospitals will report on joint replacement episodes, what administrators must tell you about their compensation, what manufacturers owe covered entities, and what app vendors may do with member data. None of it reaches your plan automatically. Every one of these becomes useful only when someone on your side asks for the document, reads it against your own claims, and writes down what they found. Put the request in writing this week and put the answer in the minutes.
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Thanks for reading.
Jude Odu
Founder and Principal, Model Optimal Care
Author, Model Optimal Care: End U.S. Healthcare Waste, One Health Plan at a Time
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