Health Care Watch: April 5, 2026
The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from March 29 – April 5. Where available, hyperlinks are included to the relevant documents. Please let us know if you have any questions or would like additional information on the items below.
LEGISLATIVE UPDATE
House
On March 27, Rep. Doris Matsui (D-CA) introduced H.R. 8143, the Ensuring Access to Lower-Cost Medicines for Seniors Act, to require Medicare Part D plans to include certain generic drugs and biosimilar products on formularies at lower cost-sharing levels than brand-name counterparts. The bill would also limit the use of utilization management tools, such as prior authorization and step therapy, that may restrict access to these lower-cost alternatives.
Senate
On March 30, Finance Committee Ranking Member Ron Wyden (D-OR) and Sen. Marsha Blackburn (R-TN) introduced the Health Workforce Innovation Act to address shortages in the health care workforce. The legislation would establish a federal grant program to support community health centers and rural health clinics in developing training partnerships with educational institutions to expand the pipeline of allied health professionals.
On March 30, Sens. Jeff Merkley (D-OR), Bill Cassidy (R-LA), Tina Smith (D-MN), Roger Marshall (R-KS) sent a letter to Centers for Medicare & Medicaid Services (CMS) Administrator Dr. Mehmet Oz urging additional action to address upcoding in Medicare Advantage (MA). The lawmakers support CMS’ proposal to exclude diagnoses from unlinked chart reviews in risk adjustment but requested broader reforms, including limiting diagnoses from additional sources and modifying payment methodologies. The letter cited continued concerns about inflated risk scores and excess federal payments tied to coding practices.
On April 2, Finance Committee Ranking Member Wyden and Health, Education, Labor, and Pensions (HELP) Committee Ranking Member Bernie Sanders (I-VT) sent a letter to Finance Committee Chairman Mike Crapo (R-ID) and HELP Committee Chairman Cassidy requesting hearings with chief executive officers of major health insurance companies. The lawmakers raised concerns about rising costs, coverage denials, and industry consolidation, and requested that the Committees examine insurer practices, including prior authorization and executive compensation, and the impact on patient access and affordability.
REGULATORY UPDATE
On March 30, the National Institutes of Health (NIH) announced that Dr. Elisabeth Armstrong was appointed Chief of Staff in the NIH Office of the Director. In this role, she will oversee operations within the Office of the Director and provide strategic counsel to NIH leadership on policy and agency priorities. Dr. Armstrong previously served in a senior leadership role at FDA and has experience across health policy, bioethics, and health care strategy.
On March 30, CMS issued a Quality & Safety Special Alert Memo to Hospital/Critical Access Hospital (CAH) Providers outlining hospital obligations related to patient nutrition services in light of the Trump administration’s recently issued 2025-2030 Dietary Guidelines for Americans. The memo reminds hospitals to ensure compliance with Conditions of Participation, including aligning menus, therapeutic diets, and food procurement practices with updated federal nutrition guidance and maintaining dietitian oversight. CMS also encouraged hospitals to evaluate policies to emphasize minimally processed foods and improve diet quality as part of broader efforts to support patient outcomes and chronic disease management.
On March 31, CMS released a Request for Applications (RFA) for the Long-term Enhanced ACO Design (LEAD) Model, a voluntary 10-year model aimed at expanding participation in accountable care and improving care coordination for Medicare beneficiaries. The model introduces enhanced population-based payments, new flexibilities for specialist integration and preventive care, and supports f small, independent, rural, and high-needs providers. Applications are due by May 17, and the model is scheduled to launch on January 1, 2027.
On March 31, the U.S. Department of Health and Human Services (HHS) announced a reorganization of its health technology leadership structure, restoring the Office of the National Coordinator for Health Information Technology (ONC) as a singularly titled office and returning the offices of the HHS Chief Technology Officer (CTO), HHS Chief Artificial Intelligence Officer (CAIO), and HHS Chief Data Officer (CDO) back under the Office of the HHS Chief Information Officer (OCIO).
On April 1, FDA approved Lilly’s Foundayo (orforglipron), the first new molecular entity approved under the Commissioner’s National Priority Voucher (CNPV) pilot program. The drug is approved for chronic weight management in adults with obesity or overweight with at least one weight-related comorbidity and was reviewed within 50 days of filing under the expedited program.
On April 1, CMS’ Innovation Center announced that participants in select Innovation Center models may begin offering a new Substance Access Beneficiary Engagement Incentive (BEI). The optional incentive allows eligible hemp-derived products to be incorporated into clinician-guided care plans for beneficiaries in models such as ACO REACH and the Enhancing Oncology Model, subject to program requirements and safeguards.
On April 1, FDA’s Center for Biologics Evaluation and Research (CBER) updated the Standard Operating Policy and Procedure (SOPP) for when drug companies want the agency to file their applications for review over protest. The SOPP applies to New Molecular Entity (NME), New Drug Application (NDA), original Biologics License Application (BLA) submissions, and associated efficacy or manufacturing supplements including those subject to the Prescription Drug User Fee Act (PDUFA), Biosimilar User Fee Act (BsUFA), and non-PDUFA products.
On April 2, CMS issued the Contract Year (CY) 2027 MA and Part D Policy and Technical Changes Final Rule. Among other policies, the rule codified provisions of the Inflation Reduction Act that redesigned the Part D benefit, including eliminating the coverage gap phase, establishing a reduced annual out-of-pocket threshold, and removing cost sharing for enrollees in the catastrophic phase. A fact sheet on the rule can be found here.
On April 2, HHS announced that the Advanced Research Projects Agency for Health (ARPA-H) launched a $144 million program, Systematic Targeting Of MicroPlastics (STOMP), to study and address the presence of microplastics in the human body. The program will support research to develop measurement tools, assess health impacts, and explore methods to remove microplastics, with an initial focus on understanding exposure and biological effects followed by potential interventions.
On April 2, CMS issued the Fiscal Year (FY) 2027 Hospice Wage Index and Payment Rate Update and Hospice Quality Reporting Program Requirements Proposed Rule. The proposed rule includes a 2.4% payment update, establishes a hospice scoring system to identify potential program integrity concerns, adds a consumer-facing indicator for noncompliant providers, and requires hospices to provide election statement addenda to beneficiaries at the start of care. CMS also outlined additional measures to improve compliance and beneficiary understanding of hospice services. The press release can be found here. A fact sheet can be found here.
On April 2, CMS issued the Fiscal Year 2027 Inpatient Rehabilitation Facility Prospective Payment System (CMS-1845-P). The proposed rule includes a 2.4% payment update, policy changes to therapy initiation and interdisciplinary team requirements, and a revised timeline for quality data submission to improve reporting timeliness. A fact sheet can be found here.
The rule also included a provision related to the DMEPOS Competitive Bidding Program (CBP) that raised the level of surety bonds required under the program from $50,000 to $100,000. CMS also used the opportunity to advance implementation of the program by announcing the launch of its Competitive Bidding Implementation Contractor (CBIC) webpage for the upcoming Round 2028. This webpage contains updated information on the next round of bidding.
On April 2, CMS issued the FY 2027 Medicare Inpatient Psychiatric Facility Prospective Payment System Proposed Rule. The proposed rule includes a 2.3% payment update, a cap on outlier payments at the facility level, and the implementation of a standardized patient assessment instrument. CMS also proposed removing certain quality measures from the Inpatient Psychiatric Facility Quality Reporting Program and requested stakeholder input on potential policy refinements. A fact sheet can be found here.
On April 2, CMS issued the FY 2027 Skilled Nursing Facility (SNF) Prospective Payment System Proposed Rule. The proposed rule includes a 2.4% payment update, removal of two COVID-19-related quality measures, and changes to data submission requirements to improve reporting timeliness and align with other post-acute care settings. CMS also outlined updates to the SNF Value-Based Purchasing Program and requested feedback on advanced care planning measures and potential refinements to the Patient Driven Payment Model. A fact sheet can be found here.
On April 2, the Environmental Protection Agency (EPA) released a list of 374 pharmaceuticals recommended for monitoring in drinking water and encouraged states, tribes, and local water systems to develop human health benchmarks for potential exposure. The list includes certain medications such as methotrexate and misoprostol for non-abortion indications and medications treating non-Hodgkin lymphoma and gastric ulcers and is intended to inform risk assessment rather than establish enforceable requirements.
On April 2, the Centers for Disease Control and Prevention (CDC), in coordination with the White House Office of National Drug Control Policy (ONDCP), issued a Health Advisory warning of increasing detection of medetomidine in the illicit fentanyl supply and associated risks of overdose and severe withdrawal. The advisory noted that medetomidine exposure can cause prolonged sedation and cardiovascular effects, and that withdrawal may require intensive medical care, with cases reported across the country.
On April 3, CMS issued a notice delaying the inclusion of deep brain stimulation for essential tremors and Parkinson’s disease, as well as percutaneous image-guided lumbar decompression for spinal stenosis, in the Wasteful and Inappropriate Services Reduction (WISeR) prior authorization model. The WISeR model, which was implemented on January 1, 2026 utilizes artificial intelligence and machine learning to make initial prior authorization decisions in traditional Medicare.
CMS is expected to release its CY27 Medicare Advantage rate announcement and Part D payment policies on April 6 at 4:15pm EDT.
WHITE HOUSE
On April 2, President Trump signed an Executive Order (EO) imposing a 100% Section 232 tariff on patented pharmaceuticals and ingredients “to bolster American national security and public health.” Under the EO, manufacturers can reduce tariff rates to 20% by securing approved U.S. production plans or be exempt from tariffs if onshoring is paired with Most Favored Nation (MFN) pricing agreements. Lower rates of 10-15% apply to imports from specific trade partners like the UK, EU, and Japan, while generics, biosimilars, and specialty categories like orphan drugs are exempt from tariffs. The tariffs take effect in 120 days for large manufacturers and 180 days for all others. A fact sheet can be found here.
On April 3, President Trump released his FY 2027 Budget proposal to Congress outlining the administration’s funding priorities across federal agencies and programs. The HHS Budget in Brief and related materials can be found here.
RULES AT THE WHITE HOUSE OFFICE OF MANAGEMENT & BUDGET (OMB)
Pending Review
CMS
Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes (CMS-2452); Proposed Rule, 12/31/2025
Interoperability Standards and Prior Authorization for Drugs (CMS-0062); Proposed Rule; 01/16/2026
Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals; the Long-Term Care Hospital Prospective Payment System; and FY 2027 Rates (CMS-1849); Proposed Rule; 01/22/2026
Independent Dispute Resolution Operations (CMS-9897); Final Rule; 01/29/2026
Strengthening Oversight of Accrediting Organizations (AO), Burden Reduction, and Related Provisions (CMS-3367); Final Rule; 02/04/2026
Medicare Drug Price Negotiation Program (CMS-4215); Proposed Rule; 02/26/2026
Medicaid Managed Care State Directed Payments and Medicaid Fee-For-Service Targeted Medicaid Practitioner Payments (CMS-2449); Proposed Rule; 02/27/2026
Announcement of Calendar Year 2027 Medicare Advantage Capitation Rates and Medicare Advantage and Part D Payment Policies (the "CY 2027 Rate Announcement"); Notice; 03/19/2026
Establishing State Community Engagement Requirements for Certain Individuals Under Section 1902(xx) of the Social Security Act (CMS-2454); Interim Final Rule; 03/31/2026
Patient Protection and Affordable Care Act, HHS Notice of Benefit and Payment Parameters for 2027; and Basic Health Program (CMS-9883); Final Rule; /01/2026
FDA
Evaluating the Safety of Antimicrobial New Animal Drugs with Regard to their Microbiological Effects on Bacteria of Human Health Concern; Guidance for Industry; Notice; 7/10/25
Postapproval Pregnancy Safety Studies; Guidance for Industry; Availability; Notice; 8/21/25
Substances Generally Recognized as Safe; Proposed Rule; 12/01/25
Establishment Registration and Product Listing for Tobacco Products; Proposed Rule; 02/19/2026
Drug Establishment Registration and Drug Listing Requirements for Establishments Engaged in Distributed Manufacturing and Certain Foreign Establishments; Rule; 03/04/2026
Cannabidiol (CBD) Products Compliance and Enforcement Policy; Notice; 03/13/2026
Harmful and Potentially Harmful Constituents in Tobacco Products and Tobacco Smoke; Established List Additions and Request for Comments; Notice; 03/19/2026
Compliance Policy Regarding Premarket and Other Requirements for Certain NIOSH Approved Air-Purifying Respirators; Draft Guidance for Industry and Food and Drug Administration Staff; Availability; Notice; 03/23/2026
HEARINGS
House
Ways & Means Committee
Field Hearing on Health Care Affordability
April 14; Time TBD; Sarasota, FL
Witnesses: Health care providers
Hearing on President Trump’s FY27 Budget Proposal
April 15, Time TBD, 1100 Longworth
Witness: The Honorable Robert F. Kennedy Jr., Secretary, HHS
Senate
Finance Committee
Hearing on President Trumps FY27 Budget Proposal
April 22; Time TBD; Location TBD
Witness: The Honorable Robert F. Kennedy Jr., Secretary, HHS
REPORTS
Office of Inspector General (OIG)
On March 30, HHS OIG released an audit report examining whether VNS Health complied with Medicare billing requirements for home health services. The audit found that VNS Health incorrectly billed Medicare for 16 of 100 sampled claims, including failures to meet billing and coding, face-to-face encounter, and plan of care requirements, and overpayments during the audit period. OIG recommended that VNS Health refund the overpayments, conduct additional internal audits, and strengthen documentation review processes to ensure compliance with Medicare requirements.
On April 2, HHS OIG released an audit report examining the accuracy of diagnosis codes submitted by Priority Health to CMS for use in the MA risk adjustment program. The audit found that 252 of 300 sampled enrollee-years contained unsupported diagnosis codes, resulting in $828,010 in net overpayments, and estimated that Priority Health received at least $4.4 million in net overpayments for 2018 and 2019. OIG recommended that Priority Health refund the estimated overpayments, identify and return additional overpayments, and strengthen compliance procedures, while Priority disagreed with some findings and all recommendations.
On April 3, HHS OIG released an audit examining whether Louisiana Healthcare Connections complied with federal and state requirements when denying prior authorization requests for behavioral health services. The audit found that the plan complied with requirements for 64 of 76 sampled denials, but identified administrative deficiencies in the remaining cases, including failures to provide required or timely written notices. Based on the sample, OIG estimated that 15.8% of prior authorization denials during the audit period did not comply with applicable requirements and did not issue recommendations.
On April 3, HHS OIG released an audit examining costs claimed by Vibrent Health under a NIH Other Transaction award for the All of Us Research Program. The audit found that of the $161.2 million claimed, at least $16.5 million was unallowable, including unapproved fringe benefit and indirect costs and unreasonable subcontract costs. OIG recommended that Vibrent Health work with NIH to determine and refund unallowable costs and establish stronger oversight mechanisms, while the company disagreed with the findings.
Government Accountability Office (GAO)
On April 1, GAO released a report examining federal funding for crisis pregnancy centers (CPCs) from fiscal years 2018 through 2024. The report found that HHS obligated at least $34 million in federal grant funding to 16 CPCs to support reproductive health-related services, though total funding is unknown due to challenges identifying these organizations in federal spending data. GAO also found that CPCs lack a standard definition and are primarily funded through private sources, with federal obligations likely underestimated in available data.
ADDITIONAL POLICY NEWS
On March 30, Smart Approaches to Marijuana and several other organizations filed a lawsuit against HHS Secretary Kennedy and CMS Administrator Oz challenging a CMS initiative to expand access to hemp-derived products for Medicare beneficiaries. The plaintiffs allege that the program was implemented without required rulemaking procedures and conflicts with existing MA coverage policies.
On March 30, the Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), the Federal Bureau of Investigation (FBI), and HHS OIG, issued an advisory urging financial institutions to identify and report suspicious activity related to health care fraud targeting federal programs. The advisory outlines common fraud schemes, money laundering typologies, and red flag indicators associated with Medicare, Medicaid, and other health care benefit programs.
On March 31, Novo Nordisk launched a subscription-based pricing model for its GLP-1 products, including Wegovy, offering three-, six-, and 12-month plans through select telehealth partners. The program provides discounted monthly pricing for cash-paying patients as part of efforts to expand access and compete in the weight loss drug market.
On April 9 and 10, the Medicare Payment Advisory Commission (MedPAC) will hold its next round of public meetings. Topics include Medicare payment incentives, Medicare ground ambulance data collection system, Part D Part D Prescription Drug Plan (PDP) market regional benchmarks and benchmark-plan availability, preferred networks and pharmacy access in Part D, MA enrollment and hospitals’ and post-acute care (PAC) providers’ finances, and Medicare beneficiaries’ enrollment information sources, and institutional special-needs plans. There is also a public comment portion for in-person attendees.