GLP-1 Coverage in Medicare & Medicaid: Expanding Access & Lowering Costs

The rising cost of GLP-1 medications – a class of drugs initially developed for type 2 diabetes, now also widely used for weight management and cardiovascular risk reduction – has become a significant barrier to access for many Americans. While these drugs have demonstrated effectiveness, roughly half of those using them report difficulty affording them, according to recent KFF polling. The Trump administration has been pursuing several strategies to lower costs and expand coverage, including direct negotiations with manufacturers and a fresh demonstration program called the BALANCE (Better Approaches to Lifestyle and Nutrition for Comprehensive hEalth) Model, designed to broaden Medicare and Medicaid access.

The BALANCE Model represents a significant, though complex, attempt to address affordability and access issues. It aims to expand coverage for GLP-1s specifically for obesity – a use currently limited under both Medicare and Medicaid – and to integrate these medications with comprehensive lifestyle support programs. Understanding the nuances of this model, including its phased implementation and participation requirements, is crucial for beneficiaries, healthcare providers and policymakers alike.

Current Coverage Limitations in Medicare and Medicaid

Historically, Medicare has prohibited coverage of medications specifically for weight loss. While GLP-1s can be covered under Medicare Part D if prescribed for an FDA-approved indication like type 2 diabetes, cardiovascular disease risk reduction, or sleep apnea, accessing them solely for obesity remains a challenge. Medicaid programs offer more flexibility, but coverage varies significantly by state. As of January 2026, only 13 states provide coverage for GLP-1s to treat obesity, a decrease from 16 states in 2025, likely due to budgetary constraints and federal funding changes. This patchwork of coverage leaves millions of individuals who could benefit from these medications unable to afford them without paying the full cash price.

The financial burden is substantial. In 2024, Medicaid spent $8.6 billion on GLP-1s for approved uses, with 8.4 million prescriptions filled. Medicare gross spending reached $27.5 billion across 21.8 million claims (though this figure doesn’t account for rebates). These figures underscore the growing demand for these medications and the urgent demand for solutions to address affordability.

A Two-Step Approach: Medicare GLP-1 Bridge and the BALANCE Model

CMS is implementing a two-step approach to expand coverage. First, the Medicare GLP-1 Bridge, launching in July 2026, will provide temporary coverage for select GLP-1s (Wegovy and Zepbound) for obesity at a $50 monthly copayment for eligible beneficiaries. To qualify, individuals must meet specific BMI criteria and have a provider attestation. This bridge program is designed to provide immediate access while the more comprehensive BALANCE Model is rolled out.

The BALANCE Model, beginning in January 2027 for Medicare and May 2026 for Medicaid, aims for longer-term, sustainable access. It involves negotiated lower prices with manufacturers – Novo Nordisk and Eli Lilly have agreed to a net price of $245 per month for participating plans – and the integration of lifestyle support programs. Participation is voluntary for manufacturers, state Medicaid agencies, and Medicare Part D plans, adding a layer of complexity to its potential impact.

Participation Requirements and Cost Sharing

For Medicare Part D plans, participation in the BALANCE Model requires meeting certain criteria, including covering all medically accepted indications for GLP-1s and placing them on the same formulary tier. Participating plans must also offer standardized cost-sharing: $50 per month for enhanced plans and $125 per month for basic plans. Beneficiaries with the Low-Income Subsidy (LIS) will not have their existing cost-sharing subsidies applied to the $50 copay, potentially creating an affordability barrier for those with limited incomes.

State Medicaid agencies that opt-in will also benefit from the negotiated lower prices, though the specific price point for Medicaid programs remains confidential. Participation is contingent on signing a State Agreement with CMS and adopting supplemental rebate agreements with participating manufacturers. States retain some flexibility in utilization management, but cannot impose restrictions more stringent than those outlined in the model’s key terms.

Potential Impacts and Uncertainties

The BALANCE Model has the potential to significantly expand access to GLP-1s for millions of Medicare and Medicaid beneficiaries. Though, several factors could limit its reach. A key concern is whether enough Part D plans will participate to meet CMS’s 80% threshold for implementation in 2027. If this threshold isn’t met, the model will not launch, potentially leaving beneficiaries with limited access. Even if the model proceeds, ongoing participation is not guaranteed, and plans could drop out in future years, disrupting treatment for those enrolled.

The budgetary impact of the BALANCE Model remains uncertain. While lower negotiated prices are expected to generate savings, these may be offset by increased utilization as more individuals gain access to these medications. CMS documentation does not currently include detailed cost projections. The model’s success will depend on whether improvements in health outcomes resulting from GLP-1 use and lifestyle interventions can lead to reductions in other healthcare costs.

the long-term sustainability of the model is unclear. The current agreements with manufacturers are in place until December 2031. Beyond that, continued access to GLP-1s for obesity will depend on whether Medicare’s statutory exclusion on weight loss drugs is lifted or whether alternative coverage mechanisms are established.

What Comes Next

The coming months will be critical for the implementation of the BALANCE Model. CMS will continue to monitor participation rates among manufacturers, state Medicaid agencies, and Part D plans. Ongoing evaluations will assess the model’s impact on access, affordability, and health outcomes. The agency will also be closely watching for any potential disruptions in coverage and working to address any challenges that arise. Beneficiaries should stay informed about their plan’s participation status and consult with their healthcare providers to determine if GLP-1s are appropriate for their individual needs. More information about the BALANCE Model can be found on the CMS website.

The evolution of GLP-1 coverage in Medicare and Medicaid is a dynamic process. Continued monitoring and evaluation will be essential to ensure that these potentially life-changing medications are accessible to those who can benefit from them.