Prognosis
After a revelation of unpaid taxes.
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Hi, it’s John and Anne in New York, where we spent much of Thursday trying to get up to speed on obscure tax law. More on that in a moment, but first ...

Today’s must-reads

  • The White House pulled its CDC nomination after it became clear he didn’t have the Senate votes. 
  • The FDA’s top lawyer resigned two days after her appointment was announced. 
  • That lawyer’s resignation paved the way for the nomination of Trump’s FDA pick to move ahead. 

Tax man

TV doctor Mehmet Oz famously assessed President Donald Trump’s health on air in 2016, back when Trump was first running for president. Little did anyone know at the time, but this was the first public look at a relationship that would end up putting Oz in the running to become one of the country’s most powerful health officials: administrator of the Centers for Medicare and Medicaid Services.

Oz will face his biggest test yet on his road to the top job at CMS when he goes before the Senate Finance Committee Friday. On Thursday, Bloomberg News broke a story about how Oz didn’t pay Medicare and Social Security taxes in 2023, according to a memo from the Democratic staff of that committee.

Oz, a TV celebrity who disclosed $94 million in assets in his filings for the CMS leadership position, will likely be grilled about his finances Friday. According to the memo, Oz pointed to a provision known as the “limited partner exception” that allows certain partners with a small role in a business to avoid Medicare and Social Security taxes on that income. His spokesperson said he was compliant with the law and cleared the ethics review for the CMS role.

Still, Democratic staffers argue Oz was “actively involved” in the company’s activities and therefore owes the taxes.

Unpaid taxes have derailed previous presidents’ cabinet nominees. Former Senator Tom Daschle, Barack Obama’s choice for Secretary of Health and Human Services, withdrew his nomination in 2009 for failing to pay $128,000 in taxes for the use of a friend’s chauffeur and car service. And after Trump was first elected president in 2016, his nominee to head the Labor Department, restaurant executive Andrew Puzder, withdrew in the face of numerous issues, including that he hired an undocumented nanny and did not pay taxes for her. But other nominees have managed to withstand questions about their tax maneuvers.

Oz’s hearing comes one day after the White House abruptly withdrew its nominee for the head of the Centers for Disease Control and Prevention, Dave Weldon, after it became clear he didn’t have enough votes to be confirmed.

If Oz is confirmed, he would lead an agency that oversees about $1.7 trillion in federal spending and provides coverage to poorer, older and disabled Americans through Medicare and Medicaid. Both programs face crucial policy questions in the years ahead.

In Medicare, a growing number of people choose private Medicare Advantage plans, a program Oz has previously suggested expanding to cover most Americans. But CMS has taken steps in recent years to rein in payments to those plans amid accusations that they overcharge the government. 

Medicaid, the joint state and federal program for lower-income people, faces fresh uncertainties in the Trump era. Congressional Republicans are eyeing Medicaid reductions to finance tax cuts. They’re also considering adding work requirements for some people on Medicaid and other steps that would limit federal payments for the program.

There’s potentially plenty of drama ahead for the nation’s biggest health programs. Oz, a surgeon before he became a TV personality, is set to play a starring role. – John Tozzi and Anne Cronin

The big story

Getting insurers to authorize and pay for care drives staggering costs in US health care. The costs of billing, claims processing and prior authorizations doctors must get for treatments have soared to around $200 billion a year — about as much as the nation spends to treat cancer.

A raft of companies has sprung up in that morass. Some help hospitals bill top dollar for their services and navigate insurance bureaucracies. Others help insurers review claims and requests for care, and audit payments after they’ve been made. Some do both.

In this Big Take, John Tozzi explores the world of “profit-enhancing middlemen” and how they’re intensifying the clashes between health insurers and providers. 

What we’re reading

Measles cases in Europe are at their highest level in 25 years, the BBC reports

Measles outbreaks in the US are being mapped by the New York Times. 

Young men looking to fix their hair loss have been sickened by finasteride, the Wall Street Journal reports.  

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