Congressional Republicans are beginning to discuss overhauling Medicaid as part of a reconciliation bill, GOP lawmakers tell Peter.

Why it matters: Changes could significantly reshape the safety net program that covers more than 70 million people, saving money but also potentially leading to significant coverage losses.

Driving the news: Perhaps the most likely Medicaid change is imposing work requirements on recipients, according to GOP sources.

• That idea was already discussed as part of last year's debt ceiling talks and is familiar to GOP members.
• House Majority Leader Steve Scalise told Peter that Medicaid work requirements "potentially" could be included in reconciliation next year.
• Asked about other Medicaid spending changes, Scalise said members "have a lot of internal conversations to have about all the things that will be included."

Yes, but: It's not yet clear how much, if any, health policy will be packed into a reconciliation bill, since the overriding focus remains on extending the 2017 Trump tax cuts.

• There has been less recent enthusiasm for controversial health policy changes among Republicans, who'd prefer to focus on taxes, energy and immigration.
• But a health package could generate valuable savings to help pay for some of the tax cuts, and Medicaid is a large pot of money, costing over $800 billion per year.
• A previous CBO estimate of work requirements found they would save over $100 billion over 10 years — and that 600,000 people would become uninsured.

What they're saying: Rep. Brett Guthrie, one of two leading contenders for Energy and Commerce chair in the 119th, told Axios he is interested in reviving a Medicaid per capita caps proposal from the 2017 Affordable Care Act repeal-replace bill.

• "We offered Medicaid reform in reconciliation in the repeal-and-replace package, and it was per capita allotments, which didn't cut Medicaid but it does limit the growth," Guthrie said.
• "I do think it has to be discussed as part of the package [next year]," Guthrie said, adding that he hadn't yet discussed the idea with leadership.

Between the lines: Another potential change is reducing the federal share of spending on the Medicaid expansion population, currently at 90%, so that it matches the lower federal share for the traditional Medicaid population.

• "It makes no sense for federal policy to pay states more for able-bodied enrollees than for disabled people, children and pregnant women on the program," said Brian Blase, president of the Paragon Health Institute and a former Trump administration health official.
• The flip side is that a cash crunch in the states could lead some to drop the Medicaid expansion altogether. Forty states have expanded their programs.

The big picture: The first Trump administration approved Medicaid waivers for conservative-led states that imposed work and reporting requirements. But courts struck down many of the approvals.

• Republicans could be wary of political blowback from efforts to reshape the entitlement program this time around.

Rep. Morgan Griffith, an Energy and Commerce member, acknowledged that "people get scared" when there is discussion of Medicaid work requirements, but noted the possibility of exemptions for handicapped people or those in school.

• There have been "some private conversations," though "nothing formal" in the committee about Medicaid changes, he said.

The bottom line: "It's hard to make adjustments to reduce federal spending without touching people who rely on the program," said Robin Rudowitz, director of the Program on Medicaid and the Uninsured at KFF.

An interest group called the Association for Prescription Psychedelics is launching today with the goal of increasing patient access to hallucinogens, Victoria reports.

Why it matters: Interest has been building in Congress to expand psychedelic treatments for veterans with post-traumatic stress disorder, and another advocacy group may build momentum for the cause.

State of play: During this session, lawmakers added amendments to the National Defense Authorization Act and the House appropriations bill that funds the VA that would make it easier to research the medical benefits of psychedelics.

• Last year's NDAA included a measure that for the first time enabled the Department of Defense to fund a clinical study on the effect of psychedelic substances such as MDMA for service members who have sustained PTSD or a traumatic brain injury.
• And early this year, the Department of Veterans Affairs announced it would solicit applications to study the use of psychedelic compounds in treating PTSD.

The intrigue: One founding member of the organization is the beleaguered psychedelic company Lykos Therapeutics, which has come under scrutiny for study conduct and data on an ecstasy-based treatment.

• In August, the FDA rejected an application by Lykos for a treatment using MDMA and psychotherapy for PTSD, saying it needed more studies.
• It would have been the first psychedelic treatment approved for clinical use in the U.S.
• Lykos has since laid off 75% its workforce and has been meeting with the FDA to discuss next steps.

Other companies working on developing psychedelic medical treatments that are part of the new group include B.More, Compass Pathways and MindMed.

1. COVID boosters: 60% of Americans say they probably won't get an updated 2024-25 vaccine, with views sharply divided across partisan lines, the Pew Research Center found.
2. PBM regulations: New York State is setting new transparency rules for the intermediaries, including making them publish lists of covered drugs and directories of pharmacies in their networks. (Bloomberg News report here.)
3. Information security: HHS' program continued to be ineffective in FY24, failing to meet targets for identifying, protecting and responding to cyberthreats, an inspector general report found.