Industry Watch Alert
CMS is testing a negotiated-pricing approach to expand access to GLP-1 therapies through the BALANCE Model, beginning as early as May 2026 in Medicaid and January 2027 in Medicare Part D. A transitional Medicare payment demonstration starting July 2026 will provide short-term access at a predefined cost-sharing level.
Key operational questions—such as final net prices, uniform coverage criteria, and data-reporting details—remain pending until CMS completes negotiations and issues additional guidance in 2026.
Executive Summary
- CMS has announced the Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth (BALANCE) Model, a voluntary test that lets Medicare Part D sponsors and state Medicaid agencies cover GLP-1 therapies for weight management and metabolic health.
- The model authorizes CMS to negotiate guaranteed net prices, potential beneficiary out-of-pocket limits, and uniform coverage criteria with participating manufacturers.
- Launch dates: Medicaid participation may begin in May 2026; Medicare Part D participation is targeted for January 2027.
- CMS has issued a Request for Applications to manufacturers and notices of intent to states and Part D plans, all due January 8, 2026.
- A separate Medicare GLP-1 payment demonstration will run from July 2026 as an interim bridge, capping beneficiary cost-sharing at 50 dollars per month.
The Impact
CMS is positioning BALANCE as a coordinated pathway to integrate high-cost weight-management drugs into public programs while capping fiscal exposure. Key operational implications include:
- Contracting and pricing administration
Negotiated net prices and standardized coverage terms will require new contract structures between manufacturers, CMS, states, and Part D sponsors. Plans will need processes to align formularies and adjudication rules with federally negotiated terms once finalized. - Coverage policy alignment across programs
Uniform access criteria aim to reduce variability between Medicaid and Medicare Part D, affecting prior-authorization workflows and cross-program beneficiary transitions. - Financial and risk considerations
Because participation is voluntary, some manufacturers or plans may opt out, creating parallel pricing and coverage environments that compliance teams must track. The interim GLP-1 payment demonstration assigns no financial risk to Part D sponsors, but plans will still manage beneficiary communications and pharmacy operations for the 50-dollar cost-sharing structure. - Data and evaluation obligations
CMS will evaluate adherence, outcomes, and cost impacts. Participating entities should anticipate data-sharing and reporting requirements that extend beyond standard Drug Utilization Review metrics.
Sources
Centers for Medicare & Medicaid Services.
Press Release: “CMS Launches Voluntary Model to Expand Access to Life-Changing Medicines, Promote Healthier Living”
—. Fact Sheet: Medicare GLP-1 Payment Demonstration (December 23, 2025)
FAQ
What is the BALANCE Model?
The BALANCE Model is a voluntary CMS Innovation Center test that allows Medicare Part D plans and state Medicaid agencies to cover GLP-1 weight-management drugs at negotiated net prices and standardized coverage terms.
When will the BALANCE Model start?
CMS indicates Medicaid participation may begin in May 2026, with Medicare Part D participation slated for January 2027.
How does the interim GLP-1 payment demonstration work?
Beginning July 2026, Medicare beneficiaries who meet negotiated access criteria may obtain GLP-1 drugs for 50 dollars per month outside the standard Part D benefit. Part D sponsors will not bear financial risk for these drugs during the demonstration.
Who must apply to participate?
Manufacturers submit applications to CMS by January 8, 2026. State Medicaid agencies and Medicare Part D sponsors submit notices of intent by the same date.
Will participation be mandatory?
No. Manufacturers, states, and Part D plans choose whether to join.
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