The following is the latest health policy news from the federal government for June 27 – July 3.  Some of the language used below is taken directly from government documents.

Congress/Budget Reconciliation

After more than 36 hours of intense lobbying by the administration and House Republican leadership and an all-night legislative session that carried well into Thursday afternoon, the House approved the Senate-passed version of H.R. 1, the reconciliation bill, by a vote of 218-214.  Voting was almost entirely along party lines, with all House Democrats voting against it and just two Republicans – Brian Fitzpatrick (PA) and Thomas Massie (KY) – joining them.  The bill now awaits President Trump’s signature.

The bill’s Medicaid provisions alone will cut $1 trillion in Medicaid spending, establish new eligibility conditions, tighten enrollment requirements, and cut Medicaid provider taxes and state directed payments.  More details on the bill’s health care provisions are outlined in a memo sent to you earlier this afternoon.

Other provisions include the creation of a “rural health transformation” fund, a prohibition of a proposed rule on minimum staffing levels in nursing homes, and a 2.5 percent Medicare payment increase for physicians for calendar year 2026.

Though the original House reconciliation bill included a delay to Medicaid DSH cuts, the final bill does not include that provision.

Once signed by the President, the legislation will require significant implementation work, with some of the provisions effective upon enactment and others taking effect as soon as January 1, 2026.

The Courts

A federal district court has rejected Johnson & Johnson’s lawsuit challenging HHS’s denial of its proposal to implement a rebate model for 340B-covered prescription drugs in place of the traditional discount method for providing rebates to providers that meet certain criteria for dispensing discounted prescription drugs on an outpatient basis.  The court found that HHS, contrary to Johnson & Johnson’s assertion, does have the authority to reject an alternative approach to fulfilling the discount requirement.  Learn more from this decision rendered by the U.S. District Court for the District of Columbia.

The Supreme Court has ruled in support of an Affordable Care Act provision calling for the appointment of an independent group to determine which preventive health services insurers are required to cover.  The plaintiffs in the case – individuals and small businesses that objected to the Affordable Care Act’s preventive-services coverage requirements – argued that members of the U. S. Preventive Services Task Force, the entity responsible for recommending which services should be covered – are “principal officers” under the constitution’s appointment clause who must be appointed by the President with the advice and consent of the Senate.  The court rejected this argument and ruled that the task force was an appropriate entity for carrying out the Affordable Care Act-created responsibility to determine which preventive services health insurers must cover.  Learn more from the Supreme Court opinion in this case.

New CMS Model:   The “Wasteful and Inappropriate Service Reduction Model” (WISeR)

CMS has announced a new Medicare model that will run from 2026 through 2031:  the “Wasteful and Inappropriate Service Reduction Model,” or WISeR.  In limited geographic areas, the WISeR Model will test a new process for determining whether enhanced technologies, including artificial intelligence (AI), can expedite prior authorization for selected items and services that have been identified as particularly vulnerable to fraud, waste, abuse, or inappropriate use.  The model will not include inpatient-only services, emergency services, and “…services that would pose a substantial risk to patients if significantly delayed.”  Participating companies will have “…expertise with managing the prior authorization process for other payers using enhanced technology like AI.”  CMS defines as “participants” in the model the companies that it selects to provide the technology-driven prior authorization services.

The model will not operate nationwide.  WISeR will be implemented in selected MAC jurisdictions and only some states within those jurisdictions:  in New Jersey (MAC area JL/Novitas), Ohio (J15/CGS), Oklahoma and Texas (JH/Novitas), and Arizona and Washington (JF/Noridian).

Companies selected to participate in the model – that is, the participants – must have clinicians with appropriate expertise to conduct medical reviews and validate coverage determinations.  While technology will support the review process, final decisions that a request for one of the selected services does not meet Medicare coverage requirements will be made by licensed clinicians.

The companies that perform the prior authorization reviews will be paid based on their ability to reduce unnecessary or non-covered services and reduce spending in traditional Medicare.  CMS’s payments to these companies will be adjusted based on their performance against established quality and process measures that measure their ability to support faster decision-making for providers and suppliers and improve provider, supplier, and beneficiary experience with the prior authorization process.

The WISeR Model will not change Medicare coverage or payment criteria or the ability of beneficiaries to seek care from their providers or suppliers of choice.  Medicare Advantage plans will not be participating in this program.  CMS plans to launch WISeR on January 1, 2026.  To make that possible, it has issued a request for applications for companies to participate in performing prior authorization reviews with a submission deadline of July 25.  Learn more about the proposed WISeR model from the following resources:

Proposed Medicare Payment Regulations
  • CMS has issued its proposed rule for updating payments under its end-stage renal disease (ESRD) prospective payment system for calendar year 2026.  CMS proposes increasing the ESRD base rate to $281.06, an increase of 2.6 percent over the current $273.82.  CMS also proposes updating the ESRD wage index and outlier policies, the acute kidney injury dialysis payment rate for renal dialysis services, and requirements for the ESRD quality incentive program.  The agency also proposes shortening the In-Center Hemodialysis Consumer Assessment of Healthcare Providers and Systems survey; seeks input on health IT use in dialysis facilities; and seeks input on future measure concepts.  Finally, CMS proposes early termination of the ESRD Treatment Choices Model.  Learn more about CMS’s proposed update of its ESRD prospective payment system from this CMS news release and the proposed regulation.  The deadline for stakeholders to submit written comments is August 29.
  • CMS has issued a proposed home health prospective payment system rule that would govern how Medicare will pay home health providers in calendar year 2026.  As required by the Bipartisan Budget Act of 2018, the proposed rule calls for a permanent prospective reduction of  4.059 percent in those payments to account for the impact of implementing the Patient-Driven Groupings Model (PDGM).  CMS also proposes an additional temporary reduction of five percent in accordance with statutory requirements to recoup retrospective overpayments.  In addition, CMS proposes recalibrating the PDGM case-mix weights; updating the low utilization payment adjustment thresholds, functional impairment levels, and comorbidity adjustment subgroups; updating the fixed-dollar loss threshold for outlier payments; changes in the face-to-face encounter policy to broaden the language to align with language 2020 CARES Act regarding which practitioners can perform face-to-face encounters; changes in the home health quality reporting program; changes in the HHCCAHPS survey that would affect certain aspects of the Home Health Value-Based Purchasing Model; revised provider enrollment provisions; changes in durable medical equipment, prosthetic devices, orthotics, and supplies (DEMPOS) accreditation practices; changes in the exemption process for prior authorization for certain DMEPOS items; and changes in DMEPOS competitive bidding program practices.  The proposed rule also includes requests for information on measures of patient well-being and nutrition and on streamlining regulations and reducing Medicare administrative burden.  Learn more about the proposed home health rule from this CMS fact sheet and the proposed regulation.  The deadline for stakeholders to submit comments is September 2.
Centers for Medicare & Medicaid Services
  • CMS has posted a bulletin presenting the July 2025 update of the Medicare hospital outpatient prospective payment system.  The bulletin includes updated coding and billing changes that took effect on July 1.  Find it here.
  • CMS has posted a bulletin presenting its FY 2026 price update for Medicare’s inpatient rehabilitation facility prospective payment system.  The bulletin addresses FY 2026 rates, rural transition policy, and the wage cap index.  Find the bulletin here.  The changes it describes take effect on October 1.
  • CMS is notifying approximately 103,000 Medicare beneficiaries that their personal information may have been involved in a data incident affecting Medicare.gov accounts.  The agency identified suspicious activity related to unauthorized creation of certain beneficiary online accounts using personal information obtained from unknown external sources.  Following detection of the incident, CMS deactivated affected accounts, assessed the scope and impact of the compromise, and worked to mitigate the effects on affected individuals and is now working with appropriate parties to investigate this situation.  Learn more from this CMS news release.
  • CMS has added the following items to its Quality Payment Program resource library.  All of these links are direct downloads of zip files.
Department of Health and Human Services
  • HHS’s Office of the Inspector General (OIG) and the Justice Department announced the filing of criminal charges against 324 defendants, including 96 doctors, nurse practitioners, pharmacists, and other licensed medical professionals, in 50 federal districts and 12 State Attorneys General offices across the country  for their alleged participation in various health care fraud schemes involving more $14.6 billion in fraudulent activity.  Learn more about the charges from this OIG notice and this Justice Department news release.
  • Following an audit, the OIG has issued a report on the availability of behavioral health providers to treat new patients enrolled in Medicare and Medicaid.  The OIG found that Medicare and Medicaid enrollee access to needed behavioral health care is hampered not only by a lack of providers actively serving Medicare and Medicaid enrollees but also by the inability of active providers to treat new patients.  Find the OIG’s report and recommendations here.
  • CMS should improve its methodology for collecting Medicare post-operative visit data on global surgeries, the OIG concludes in a new audit report that also offers recommendations for addressing this shortcoming.  Find that report here.
  • The OIG has issued a favorable opinion regarding a proposed arrangement in which a medical device manufacturer would offer up to $2,500 to reimburse purchasers for actual costs incurred associated with a needle stick injury caused by the failure of a device that it manufactures.  Find that opinion here.
  • The OIG has issued a favorable opinion regarding assistance, including travel, lodging, and associated expenses, provided by a pharmaceutical manufacturer to qualifying patients receiving its gene therapy product and their caregivers.  Find that opinion here.
  • The OIG has issued a favorable opinion regarding a program operated by a pharmaceutical manufacturer to sponsor a companion laboratory test for eligible patients before a provider can prescribe a certain prescription drug manufactured by the pharmaceutical manufacturer.  Find that opinion here.
  • HHS and the Justice Department have created a new DOJ-HHS False Claims Act Working Group that will seek to use the False Claims Act to combat health care fraud.  The group’s focus will be on Medicare Advantage; drug, device, or biologics pricing, including arrangements for discounts, rebates, service fees, and formulary placement and price reporting; barriers to patient access to care, including violations of network adequacy requirements; kickbacks related to drugs, medical devices, durable medical equipment, and other products paid for by federal health care programs; materially defective medical devices that affect patient safety; and manipulation of electronic health records systems to drive inappropriate utilization of Medicare-covered products and services.  Learn more about the new group, its composition, and how it will work from this HHS news release.
  • HHS’s Office of Assistant Secretary for Technology Policy/Office of the National Coordinator for Health Information Technology (ASTP/ONC) has published its annual Standards Version Advancement Process (SVAP), the approved standards for 2025.  SVAP is designed to support industry interoperability needs and enable the use of newer standards in the ONC Health IT Certification Program.  Learn more about the updated standards and find links to those standards in this ASTP/ONC blog post.
  • Patients are making greater use of their electronic health records, ASTP reports, and quantifies, in a new blog post.  Find that post here.
Approved Medicaid State Plan Amendments

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

  • To Missouri, streamlining requirements for the state’s biopsychosocial treatment of obesity program to remove administrative burden to improve accessibility of services for participants.
  • To Kansas, assuring coverage for clinic services outside of the “four walls” of Indian Health Service/Tribal clinics.
  • To Washington state, updating long-acting reversible contraceptive devices provided immediately postpartum at acute-care hospitals that are  from the DRG payment method and reimbursed via the fee schedule.
  • To Washington state, addressing reimbursement of Section 5121 of the Consolidated Appropriations Act, 2023 to add targeted case management services to eligible juveniles
  • To Washington state, aligning areas of coverage in the alternative benefit plan with the Medicaid state plan.
  • To Texas, making requirements for physical therapy services consistent with requirements for Medicaid home health services.
  • To Texas, adding certified family partner services as a new Medicaid benefit.
  • To Louisiana, amending provisions governing reimbursement methodology for intermediate-care facilities for individuals with intellectual disabilities (ICF/IID) to provide for a one-time lump-sum payment in fiscal year 2025 to all privately owned or operated ICF/IID that billed Medicaid between August 1, 2024 and October 31, 2024 and are active and Medicaid-certified at the time of payment.
  • To Pennsylvania, assuring coverage for clinic services outside of the four walls of behavioral health clinics or clinics located in rural areas.
  • To Tennessee, updating Attachments 3.1-A, 3.1-B, and 4.19-B pages of the Medicaid state plan to comply with federal regulation 42 CFR 440.169 and establishing a new targeted case management benefit for children who are receiving early intervention services.
  • To Illinois, updating the STRIVE per diem staffing add-on portion of the nursing facility rate and the real estate tax component of the nursing facility payment rate.
HHS Newsletters, Reports, and Videos
  • CMS – MLN Connects – July 3
  • AHRQ News Now – July 1
  • HRSA eNews – June 26
  • CMS – CMS has posted a series of instructional videos about how to work with its hospital quality reporting system.  Those videos address:
Government Accountability Office (GAO)

In October of 2024 the GAO convened a forum to explore the paradox that while health care spending per capita is higher in the U.S. than in any other high-income country, Americans do not live as long in comparison and are more likely to die of conditions that can be prevented or treated.  During the forum, experts from government, academia, and industry identified changes to the health care system – including improving primary care, expanding the health care workforce, and reforming health care pricing and payments – that  could lower costs and improve patients’ outcomes.  Learn more from the GAO report  “Highlights of a Forum:  Reducing Spending and Enhancing Value in the U.S. Health Care System.”

Medicaid and CHIP Payment and Access Commission (MACPAC)
  • MACPAC has published an issue brief on differences in demographics and access to care by source of health coverage for adults with intellectual and developmental disabilities.  Find it here.
  • MACPAC has published an issue brief on access to dental services for adults with intellectual and developmental disabilities.  Find it here.
Occupational Safety and Health Administration (OHSA)

OSHA has proposed removing its COVID-19 Emergency Temporary Standard and its associated recordkeeping and reporting provisions.  The reporting requirement was instituted in June of 2021, during the COVID-19 public health emergency, to help protect health care workers from dangerous conditions.  Removal of the temporary standard would not eliminate the requirement to report work-related cases of COVID-19 to OSHA.  Learn more about OHSA’s proposed action from this formal notice.  The deadline for stakeholders to submit written comments is September 2.

Cybersecurity and Infrastructure Security Agency

The Cybersecurity and Infrastructure Security Agency (CISA), FBI, Department of Defense Cyber Crime Center, and National Security Agency (NSA) have published a notice that Iranian cyber actors may target vulnerable U.S. networks and entities of interest.  Among the targets of the current campaign have been the health care and public health sectors.  The notice described recent attacks, outlines mitigation strategies, and directs readers to additional resources.  Find the notice here.

Stakeholder Events

CMS – Agency for Healthcare Research and Quality – Understanding the CMS Patient Safety Structural Measure Requirements for Hospitals – July 8

CMS’s Agency for Healthcare Research and Quality will hold a webcast on Tuesday, July 8 at noon (eastern) to provide an overview of CMS’s patient safety structural measure and how the AHRQ Surveys on Patient Safety Culture® (SOPS®) hospital survey, and a shorter SOPS pulse survey version, can be used to meet requirements for Domain 3:  Culture of Safety & Learning Health Systems.  Go here to learn more about the webcast and to register to participate.

HHS – Agency for Healthcare Research and Quality – July 17

HHS’s Agency for Healthcare Research and Quality (AHRQ) will host a webinar on July 17 at 12:30 p.m. (eastern) that covers how empowering patients to take an active role in their health is key to driving meaningful and sustainable behavior change through tools such as clinical decision support systems, artificial intelligence (AI)-powered platforms, and mobile health apps.  Go here to learn more about the webinar and to register to participate.