The following is the latest health policy news from the federal government for September 26 to October 3.  Some of the language used below is taken directly from government documents.

Health Care During the Government Shutdown

With the federal government technically without spending authority now that FY 2026 has begun without an approved FY 2026 budget, the federal role in health care will change in some respects and be greatly reduced in others.

Medicare and Medicaid will continue to function; previous legislation ensures Medicaid funding through the first quarter of FY 2026.  States will continue to receive federal funding to support their CHIP programs.  CMS will continue to operate the federal health insurance Marketplace, including verifying applicants’ eligibility.

Flexibilities for telehealth services have expired, including the prohibition against Medicare patients receiving telehealth services in their homes except for the diagnosis and/or treatment of mental health issues and the limit on non-rural facility settings serving as originating sites.  When certain legislative payment provisions (“extenders”) are scheduled to expire, CMS directs all MACs to implement a temporary claims hold.  This standard practice is typically up to 10 business days and ensures that Medicare payments are accurate and consistent with statutory requirements.  Go here to see that notice, which addresses telehealth, claims processing, and the MACs during the shutdown.

Medicaid disproportionate share (Medicaid DSH) allotments to the states will be cut – a reduction that will amount to $8 billion in Medicaid DSH cuts in FY 2026.  Congress has expressed a desire to delay this cut but for now it will begin to take effect.

The Acute Hospital Care at Home program has ended.  Current participants must be discharged or return to a hospital.

The Department of Health and Human Services has reduced its workforce by 40 percent during the federal government shutdown while the Centers for Medicare & Medicaid Services has furloughed nearly half its staff.  The Office of Management and Budget has issued a memo encouraging agencies to consider making at least some and possibly many of these furloughs permanent.

CMS will suspend many health care facility survey and certification activities; which activities will and will not continue during the shutdown are outlined in this CMS memo to state survey agencies.

CMS’s Office of Hearings has shut down but providers can still file electronically and should continue to meet their filing deadlines.

CMS will have a limited capacity to make policy decisions and develop payment proposals and regulations; to engage in community outreach, education activities, and beneficiary casework; and to oversee its contractors, including the Medicare Administrative Contractors (MACs), although the MACs will continue to perform all functions related to Medicare fee-for-service claims processing and payment.

Learn more about how HHS and CMS plan to operate during the federal government shutdown from this HHS contingency staffing plan and CMS’s explanation of how it plans to proceed in the absence of an approved federal budget.  In addition, CMS has issued a special edition of its MLN Connects newsletter which, as noted above, addresses telehealth, claims processing, and Medicare Administrative Contractors status during the shutdown; find that special edition here.

Congress

The federal government shut down on Wednesday when Congress failed to pass a continuing resolution (CR) to maintain funding for government operations.  The Senate voted on Wednesday, for the third time, on both Democratic- and Republican-backed CRs but neither measure gained the 60 votes needed to pass.  Three Democratic senators – Catherine Cortez Masto (NV), John Fetterman (PA), and Angus King (ME) – voted in favor of the Republican bill; five more Democrats would have to vote for a Republican CR to reach the 60-vote threshold.  Democratic lawmakers continue to hold out for further negotiations to extend the enhanced health insurance subsidies and a bipartisan group of rank-and-file senators is seeking a path forward.

Later today the Senate is expected to vote again before the weekend recess but the measure is expected to fail again.  Senate majority leader Thune has stated that the Senate will not vote over the weekend, so if today’s vote fails, as expected, the shutdown will continue into next week.

The White House
  • President Trump has issued an executive order instructing the MAHA Commission to work with the Assistant to the President for Science and Technology and the Special Advisor for AI and Crypto to develop innovative ways to use advanced technologies such as AI to unlock improved diagnoses, treatments, cures, and prevention strategies for pediatric and young adulthood cancer.  The order also directs increased investment from existing federal funds for the Childhood Cancer Data Initiative to ensure that the federal government has the best available data for this initiative and for private sector engagement to ensure that advanced technologies, including AI, are used to unlock cures for pediatric cancer to the maximum possible extent.  The executive order also directs the Secretary of Health and Human Services to fully integrate AI into current work on interoperability to provide data to inform research and clinical trial design in the private sector and academia while ensuring that patients and parents control their health information.  Learn more from the White House executive order and this fact sheet.  Separately, HHS has announced that it is doubling funding for its Childhood Cancer Data Initiative at the National Cancer Institute.  Find that announcement here.
  • During a news conference to announce an agreement with a pharmaceutical company to bring American prescription drug prices in line with the lowest paid by other developed nations, President Trump announced that a new web site, “TrumpRX,” would be established to facilitate the direct purchase of such drugs by consumers.  Learn more about the agreement with the pharmaceutical company from this White House fact sheet; the administration has not yet shared any details about the new program and web site.
Centers for Medicare & Medicaid Services
  • CMS has issued guidance to state Medicaid directors announcing an updated interpretation of the portion of Social Security Act that authorizes federal financial participation for care and services necessary for treatment of an emergency medical condition for undocumented residents who are not eligible for full Medicaid benefits.  Specifically, it is changing its interpretation of how the act applies to Medicaid managed care payments to improve program and fiscal integrity in the Medicaid program.  Under the new policy, emergency Medicaid can only cover the actual emergency services provided and cannot be used to buy services from a Medicaid managed care plan under a capitated arrangement.  Find that memo here.
  • CMS has announced that average premiums, benefits, and plan choices for Medicare Advantage and the Medicare Part D prescription drug program are expected to remain stable in 2026.  According to the agency, average premiums are projected to decline in both the Medicare Advantage and Part D programs from 2025 to 2026.  According to CMS, the average monthly plan premium across all Medicare Advantage plans, which includes plans that provide prescription drug coverage and Medicare Advantage Special Needs Plans (SNPs), is estimated to decrease from $16.40 in 2025 to $14.00 in 2026.  Learn more from this CMS news release, which includes links to state-by-state plan and cost data and other resources.
  • CMS is updating its Civil Money Penalty Reinvestment Program, which directs money collected from nursing home fines (civil money penalties) into projects that seek to improve the quality of care and life for residents.  It has introduced a new, standardized application form, raised the individual project funding cap, expanded the scope of eligible projects, and more.  Learn more from this letter from CMS to state survey agencies.
  • CMS is revising its survey process for Rural Health Clinics following recent changes in regulations governing those facilities’ primary care services and laboratory services.  Learn more about the changes in the survey process from this CMS memo to state survey agencies.
  • CMS has released final guidance for the third cycle of negotiations under the Medicare Drug Price Negotiation Program.  Among other changes, the final guidance implements changes to the orphan drug exclusion; includes a shift from draft guidance in calculating total expenditures for drugs and biological products payable under Part B; and addresses how CMS will identify a potential qualifying single source drug that is a vaccine based on its antigen components.  The third cycle of negotiations will occur in 2026, with negotiated maximum fair prices taking effect on January 1, 2028.  CMS will announce up to 15 additional drugs covered under Part D and/or payable under Part B for potential negotiation by February 1, 2026 and any additional drugs selected for the first cycle of renegotiation.  Learn more from this CMS news release and this accompanying fact sheet.
  • CMS has posted a bulletin with its October quarterly update for the 2025 durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) fee schedule.  Find the bulletin here.  The changes it presents took effect on October 1.
  • CMS has updated its bulletin describing implementation of the skilled nursing facility three-day rule waiver under the Transforming Episode Accountability Model (TEAM).  Find that bulletin here.  It takes effect on January 1, 2026.
  • CMS has added the following items to its Quality Payment Program resource library.  (Note:  clicking these links automatically downloads files and the first two are zip files.)
Department of Health and Human Services
  • HHS’s Office of the Assistant Secretary for Planning and Evaluation (ASPE) has modeled the excess utilization of three commonly used drugs that treat heat-related illness in emergency departments during extreme heat events using literature-derived estimates of emergency department visit rates for heat-related illness on extreme heat days and drug utilization rates from medical claims data.  See its findings in this ASPE report.
  • A new ASPE analysis defines and measures the resilience, criticality, and vulnerability of medical product supply chain.  Learn more about what this analysis found in this ASPE report.
  • Hospitals charged CMS for trauma team activations that did not comply with federal requirements, HHS’s Office of the Inspector General has concluded after a review of such events.  Learn more about what the OIG found and its recommendations for addressing this challenge from this OIG report.
  • Participants in HRSA’s Rural Communities Opioid Response Program generally met all core activities and benchmarks, the OIG concludes after a recent audit.  Learn more about the OIG’s findings from this report.
  • HHS’s Health Resources and Services Administration (HRSA) has published a request for comments on draft recommendations to update its women’s preventive services guidelines for screening for cervical cancer.  Find that notice here.  The deadline for submitting comments is October 31.
Medicaid State Plan Amendments

CMS has approved the following state plan amendments for Medicaid and CHIP programs.

  • To Connecticut, establishing coverage and reimbursement for substance use disorder adolescent American Society of Addiction Medicine (ASAM) levels of care 3.1 and 3.7; increasing treatment rates for adolescent level of care 3.5; and collapsing the treatment bed rate corridor for adult residential levels of care 3.1, 3.3, 3.5, and 3.5 pregnant and parenting women under the rehabilitation services benefit to address the opioid epidemic and other substance use disorders.
  • To Connecticut, updating the income and resource standards for its working disability groups.
  • To Michigan, updating that in the case of receivership, the state will adjust a nursing facility’s standard rates if a receiver has been appointed solely to reflect the reasonable costs associated with the court-approved closure or sale of the nursing facility or other appropriate situation.
  • To South Carolina, addressing the undue hardship waiver requirements for estate recovery.
  • To Utah, amending target group criteria for targeted case management services.
  • To New York, establishing a four percent rate modifier for certain EPSDT early intervention services that are provided to children who reside in rural and underserved areas of the state.
  • To New York, extending additional medical assistance payments to state and county hospitals for the periods from April 1, 2025 through March 31, 2028, and as part of FY 2026 enacted budget to discontinue the indigent care pool for public general hospitals in New York City operated by New York City Health and Hospitals, which would provide a total global cap savings of $113.4 million ($56.7 million state share).
  • To New Hampshire, adding reimbursement for ambulatory non-transport services.
  • To Kentucky, adding the Rural Emergency Hospital reimbursement service.
  • To Kansas, updating the definition for carve-out drugs.
  • To Arizona, bringing the state into compliance with the mandatory exception to the Medicaid clinic services benefit “four walls” requirement for Indian Health Service and Tribal clinics and electing the optional exceptions for behavioral health clinics and clinics located in rural areas.
  • To Georgia, adding the state’s Therapeutic Care Model to the Medicaid state plan as a rehabilitative service.
State-Directed Medicaid Payments

CMS has approved the following state applications for Medicaid state-directed payments.

  • To New Jersey, renewing a perinatal episode of care pilot established by the state for the rating period covering July 1, 2025 through June 30, 2026, to be incorporated into capitation rates through a risk-based rate adjustment and separate payment terms of up to $3.5 million.
  • To Illinois, amending a uniform dollar increase for nursing facilities based on quality weighted Medicaid days for the rating period covering January 1, 2024 through December 31, 2024, which was incorporated into capitation rates through a separate payment term of up to $57.5 million.
  • To Illinois, renewing a uniform increase established by the state for inpatient and outpatient services at eligible Illinois hospitals for the rating period covering January 1, 2025 through December 31, 2025, to be incorporated into capitation rates through a separate payment term of up to $8 billion.
  • To New York, approving a uniform dollar increase for eligible inpatient hospital and outpatient hospital services at government general hospitals, other than those operated by the state of New York or the State University of New York, located in a city with a population of over one million for the rating period covering April 1, 2024 through March 31, 2025, which was incorporated into capitation rates through a separate payment term of up to $2.3 million.
  • To New York, renewing a uniform increase for inpatient and outpatient services delivered by qualifying financially distressed hospitals for the rating period of April 1, 2025 through March 31, 2026, to be incorporated into capitation rates through a separate payment term up to $1.8 billion.
  • To New York, renewing a uniform increase for Sole Community Hospitals as established by the state for outpatient services for the rating period of April 1, 2025 through March 31, 2026, to be incorporated into capitation rates through a separate payment term up to $146 million.
  • To California, renewing a uniform dollar increase for inpatient and outpatient services provided by eligible network children’s hospitals for children’s hospital supplemental payments for the rating period covering January 1, 2025 through December 31, 2025, to be incorporated into capitation rates through a separate payment term amount of up to $230 million.
  • To Michigan, renewing a uniform increase established by the state for primary care and specialty physician services provided by practitioners employed or under contract with approved public entities, for the rating period covering October 1, 2024 through September 30, 2025, which was incorporated into capitation rates through a separate payment term of up to $610 million.
  • To Kansas, renewing a uniform increase for outpatient hospital services provided by border city children’s hospitals and large public teaching hospitals for the rating period covering January 1, 2025 through December 31, 2025, to be incorporated into capitation rates through a separate payment term of up to $10 million.
  • To the District of Columbia, approving a uniform percentage increase for inpatient and outpatient hospital services for the rating period covering October 1, 2024 through September 30, 2025, to be incorporated into capitation rates through a separate payment term amount of up to $485 million.
  • To Mississippi, renewing a uniform percentage increase and performance improvement initiative payments established by the state for inpatient hospital services, outpatient hospital services, and rural emergency hospital services for the rating period from July 1, 2025 through June 30,2026, to be incorporated into capitation rates through a separate payment term of up to $1.5 billion.
  • To Oregon, renewing a uniform increase established by the state for inpatient and outpatient hospital services provided by DRG hospitals for the rating period covering January 1, 2025 through December 31, 2025, to be incorporated into capitation rates through a separate payment term of up to $1 billion.
  • To North Carolina, renewing a uniform dollar increase and minimum fee schedule for home- and community-based services and behavioral health outpatient services established by the state for the rating period covering July 1, 2025 through June 30, 2026, to be incorporated into capitation rates through a risk-based rate adjustment.
  • To Kansas, renewing a uniform increase for inpatient and outpatient hospital services for critical access hospitals and general hospitals for the rating period from January 1, 2025 through December 31, 2025, to be incorporated into capitation rates through a separate payment term of up to $998 million.
  • To Massachusetts, renewing a uniform increase established by the state for eligible inpatient and outpatient hospital services for the rating period covering January 1, 2024 through December 31, 2024, which was incorporated into capitation rates through a separate payment term of up to $600 million.
  • To New Hampshire, renewing a uniform dollar increase for inpatient discharges and outpatient visits to qualifying critical access hospitals for the rating period covering July 1, 2025 through June 30, 2026, to be incorporated into capitation rates through a separate payment term amount of up to $95 million.
  • To Washington, renewing a uniform increase established by the state for qualified licensed professionals employed by a state university-owned or operated hospital or affiliated practice, state-owned and operated school of dentistry, or public hospital district for the rating period covering January 1, 2025 through December 31, 2025, to be incorporated into capitation rates through a separate payment term of up to $132 million.
HHS Newsletters, Reports, and Videos
  • CMS – MLN Connects – September 25
  • AHRQ News Now – September 30
  • AHRQ News Now, Special Edition – September 24
  • CMS – CMS has posted video of its September 19 webinar for potential applicants for Rural Health Transformation Program funding.  Find that video and an accompanying transcript here.
  • CMS Center for Medicare and Medicaid Innovation – CMMI Evaluation Digest – September 2025
  • Morbidity and Mortality Weekly Report – “Pediatric Influenza-Associated Encephalopathy and Acute Necrotizing Encephalopathy – United States, 2024–25 Influenza Season” – September 25
  • Morbidity and Mortality Weekly Report – “Tularemia Antimicrobial Treatment and Prophylaxis: CDC Recommendations for Naturally Acquired Infections and Bioterrorism Response” – United States, 2025” – October 2
  • HRSA – video of an August webinar about how the National Health Service Corps can help students and MD/DOs reduce or eliminate medical school debt through scholarship and loan repayment programs.
  • HRSA – video of the open session of the ad hoc meeting of the Organ Procurement and Transplantation Network (OPTN) board of directors held on July 1
  • OPTN Modernization Monthly Update – September
  • OPTN – message from the OPTN president – September 25
  • HRSA eNews – September 25
  • HRSA – video from the OPTN board of directors meeting on June 9 addressing the agency’s latest actions supporting OPTN modernization.
Centers for Disease Control and Prevention

In June, the CDC issued a food safety alert regarding a multistate outbreak of Listeria infections originating from prepared foods.  Now, the agency has expanded its alert to additional products.  Learn more about the specific products and the precautions consumers should take from this CDC food safety alert.

Stakeholder Events

Populations Webinar – October 8

HHS’s Agency for Healthcare Research and Quality (AHRQ) will hold a webinar on digital solutions for aging populations on Wednesday, October 8 at 2:30 (eastern).  Presenters will discuss how tools such as remote monitoring, telehealth, and personalized health apps are transforming care for older adults by enabling timely interventions, improving access, and supporting independence and can help improve health outcomes, overcome adoption barriers, and ensure older adults benefit from accessible, user-friendly, and effective digital solutions.  Go here to register to participate and for additional information about the webinar and continuing education credits for a variety of health care professionals.

MedPAC – Commissioners Meeting – October 9-10

MedPAC’s commissioners will hold their next public meeting virtually on Thursday, October 9 and Friday, October 10.  An agenda and registration information are not yet available but when they are they will be posted here.  MedPAC notes that this meeting is contingent on enactment of funding for the federal government.

MACPAC – Commissioners Meeting – October 30-31

MACPAC’s commissioners will hold their next public meeting virtually on Thursday, October 30 and Friday, October 31.  An agenda and registration information are not yet available but when they are they will be posted here.

HHS/Office of the Assistant Secretary for Technology Policy – ASTP Annual Meeting – February 11-12, 2026

HHS’s Office of the Assistant Secretary for Technology Policy will hold its annual meeting in Washington, DC on February 11-12, 2026.  The meeting will include in-person education and plenary sessions and networking opportunities for the health IT community.  The main stage plenary sessions will also be available for viewing online.  ASTP will soon post information on the meeting’s agenda, how to register, and how to reserve a hotel room through ASTP’s room block.  When it does, that information will be posted here.