Health Care Watch: May 25, 2026

The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from May 18 – May 24.  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 May 20, the Budget Committee Chairman Jodey Arrington (R-TX), Ways & Means Committee Chairman Jason Smith (R-MO), and Energy & Commerce Committee Chairman Brett Gurthie (R-KY) sent a letter to Congressional Budget Office (CBO) Director requesting answers on technical changes in the Budget and Economic Outlook: 2026 to 2036, specifically regarding CBO's upward revision of Medicare Part D expenditures.  According to the letter, CBO has increased its Part D spending projections by $600 billion since 2025, driven by a 35% increase in per-enrollee costs, while CBO originally estimated the Medicare drug price negotiation and Part D redesign provisions in the Inflation Reduction Act (IRA) would reduce the deficit by $129 billion.  The chairmen requested clarity on CBO’s revised scoring of the IRA's drug pricing provisions, a breakdown of future Part D expenditure projections, and an explanation of the change in projections.  

• On May 20, the Energy & Commerce Health Subcommittee held a hearing titled, “Examining the Medicare Physician Fee Schedule, MACRA, and Opportunities for Payment Reforms.”  The hearing examined how Medicare reimbursement structures affect independent physician practices, including staffing, technology investment, and patient access, as well as the effects of vertical integration as independent practices are acquired by hospital systems or private equity firms.  

• On May 21, the Energy & Commerce Committee held a full committee markup to consider 16 bills, 14 of which would address health-related issues.  All health-related bills were advanced by voice vote.  A summary of the legislation considered can be found here.  

• On May 21, the Ways & Means Committee held a full committee markup to consider eight bills, six of which would address health-related issues including expanding pharmacists’ scope of practice in the Medicare program, improving access to home dialysis services; and reducing fraud in home health, hospice and durable medical equipment.  All of the bills were favorably reported. 

• On May 21, Reps. John Joyce (R-PA), Greg Murphy (R-NC), and Kim Schrier (D-WA) circulated a discussion draft of legislation that would modify the Medicare physician payment formula and make changes to the Merit-based Incentive Payment System (MIPS).  The bill would update the conversion factor beginning in 2027 to include an increase tied to the Medicare Economic Index, more than double the spending cap for physician services from $20 million to over $54 million, increase payments for primary care services by $500 million annually for four years, and require physicians to consult clinical guidelines before ordering advanced imaging.  The legislation is expected to be introduced in the early summer.

• The House will return to session on June 2.

Senate 

• On May 20, Finance Committee Ranking Member Ron Wyden (D-OR) led over 20 Senate Democrats in introducing a Congressional Review Act (CRA) resolution to repeal the Centers for Medicare & Medicaid Services (CMS) Wasteful and Inappropriate Service Reduction (WISeR) Model, which uses AI and machine learning to approve or deny select medical services for Medicare beneficiaries in six states.  A companion resolution was introduced in the House by Reps. Greg Landsman (D-OH) and Suzan DelBene (D-WA).  

• On May 20, Finance Committee Ranking Member Wyden and 16 Senate Democrats sent a Dear Colleague letter outlining an initiative to improve access and affordability of long-term care for seniors, Americans with disabilities, and their families.  The letter identifies three policy goals: making home care affordable and accessible, improving the quality of care in nursing homes, and using incentives to strengthen the long-term care workforce.  Ranking Member Wyden also released a flash report addressing recent changes to long-term care policy, including Medicaid funding reductions and the repeal of nursing home staffing standards that required 24-hour registered nurse access.  

• The Senate will return to session on June 1.

REGULATORY UPDATE

• On May 18, HHS announced a reorganization of its Office for Civil Rights (OCR) that returns the office to a program-based structure with three subject-matter divisions: the Conscience and Religious Freedom Division (CRFD), the Civil Rights Division, and the Health Information Privacy, Data, and Cybersecurity Division.

• On May 19, Bloomberg News reported that HHS Secretary Kennedy enlisted Dr. Stephanie Haridopolos to take on some of the responsibilities of the U.S. Surgeon General on an interim basis, according to an email to staff.  President Donald Trump nominated Dr. Nicole Saphier to the role last month.  

• On May 20, various news outlets reported that HHS Secretary Kennedy dismissed Vice Chairs John Wong and Esa Davis from the U.S. Preventive Services Task Force (USPSTF) in letters sent on May 11.  The letters cited a review of current appointments as the basis for termination.  

• On May 20, CMS previewed its 2026-2031 Strategic Framework at an event hosted by the Bipartisan Policy Center (BPC), featuring CMS Administrator Dr. Mehmet Oz and Deputy Administrator and Chief of Staff Stephanie Carlton.  The framework outlines four pillars: 

• Leading Payor - focusing on advancing artificial intelligence (AI) for the agency and beneficiaries;

• Crush Fraud - focusing on reducing inappropriate spending and strengthening Medicaid oversight;

• Make America Healthy Again (MAHA) - focusing on improving health outcomes through digital tools, state partnerships, and a goal of reducing obesity by 15%; and

• Drive Affordability - focusing on lowering health care costs, achieving MFN drug pricing, and ensuring every senior has an accountable care relationship.  

• On May 21, CMS proposed a rule titled Medicaid Managed Care State Directed Payments (SDP) and Medicaid Fee-for-Service (FFS) Targeted Practitioner Payments, which would cap SDP provider payment rates at 100% of Medicare payment rates for expansion states and 110% for non-expansion states, apply similar limits to certain targeted Medicaid FFS payments, and establish consistent national standards for transparency and accountability.  This proposed rule is being released to advance policy changes consistent with a Presidential Memorandum, “Eliminating Waste, Fraud, and Abuse in Medicaid,” and implement provisions of the One Big Beautiful Bill.  A fact sheet on the rule can be found here.  

• On May 21, FDA published 71 new and revised product-specific guidances (PSGs) intended to facilitate the development of generic drugs.  PSGs describe the agency's current expectations for developing generic drug products that are therapeutically equivalent to specific reference listed drugs (RLDs) and are published as part of FDA's commitments under the Generic Drug User Fee Amendments Reauthorization of 2022 (GDUFA III).  

• On May 21, Senators at an NIH appropriations hearing revealed that acting National Institute of Allergy and Infectious Diseases (NIAID) Director Dr. Jeffery Taubenberger had resigned his position shortly before he was scheduled to testify before the Appropriations health subcommittee.  This leaves the NIAID without a confirmed leader amid simultaneous Ebola and Hantavirus outbreaks. 

• On May 21, the HHS Office of the Assistant Secretary for Financial Resources (ASFR) announced the launch of the Audit Enforcement and Risk Oversight (AERO) initiative, a department-wide program integrity effort designed to hold states and grantees accountable for persistent audit noncompliance across HHS-funded programs.  As part of the initiative, HHS sent formal letters to all 50 state governors and treasurers and announced it would use AI analytical tools to conduct a comprehensive review of at least five years of single audit history across all 50 states, with initial findings identifying longstanding unresolved internal control deficiencies and hundreds of grantees with delinquent audit submissions.

• On May 21, the Department of Justice (DOJ), alongside HHS Secretary Kennedy, CMS Administrator Oz, and Assistant Attorney General Colin McDonald, announced charges against 15 individuals in Minnesota in connection with approximately $90 million in fraudulent Medicaid claims, including billing for autism and disability services that were never provided.  CMS has withheld more than $300 million in Medicaid payments to Minnesota this year amid broader concerns about provider fraud, and Minnesota has agreed to revalidate all providers of high-risk services by May 31.

• On May 22, FDA approved the Hepcludex (bulevirtide-gmod) injection as the first FDA-approved treatment for chronic hepatitis delta virus (HDV) infection in adults without cirrhosis or with compensated cirrhosis.  FDA granted approval to Gilead Sciences under the Accelerated Approval pathway following Breakthrough Therapy Designation and Orphan-Drug Designation.

WHITE HOUSE

• On May 18, President Trump announced an expansion of TrumpRx.gov to include more than 600 generic medications, allowing users to compare cash prices across pharmacy discount programs including Amazon Pharmacy, GoodRx, and Mark Cuban’s Cost PlusDrugs.  The platform does not include controlled substances, drugs with FDA mandated risk evaluation and mitigation strategies (REMS), or medications not commonly offered through direct-to-consumer channels.  The generic drug listings are separate from discounts on branded medications negotiated through the Administration's Most-Favored-Nation (MFN) drug price agreements.  President Trump also indicated that since the launch of TrumpRx.gov in February, the site has been visited more than 10 million times and has generated over $400 million in savings for consumers. 

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

• 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

• 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 

• Alternative Payment Model Updates and the Increasing Organ Transplant Access (IOTA) Model (CMS-5544); Final Rule; 04/11/2026

• CY 2027 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates (CMS-1850); Proposed Rule; 04/13/2026 

• CY 2027 Revisions to Payment Policies under the Physician Fee Schedule and Other Revisions to Medicare Part B (CMS-1848); Proposed Rule; 04/14/2026 

• Exchange Pre-Enrollment Eligibility Verification (CMS-9873); Proposed Rule; 04/22/2026 

• CY 2027 Changes to the End-Stage Renal Disease (ESRD) Prospective Payment System and Quality Incentive Program (CMS-1846); Proposed Rule; 04/22/2026

• CY 2027 Home Health Prospective Payment System Rate Update and Home Infusion Therapy Services Payment Update (CMS-1844); Proposed Rule; 05/11/2026 

• Strengthening the Integrity of Medicaid and CHIP Managed Care, Financing, and Access to Care (CMS-2450); Proposed Rule; 05/12/2026

• Request for Information: Comprehensive Review of the Essential Health Benefits Framework and Typical Employer Standard (CMS-9874); Notice; 05/14/2026

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

• 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

• Serotonin-2A Agonists and Related Products: Considerations for Clinical Investigations; Guidance for Industry; Availability; Notice; 04/17/2026

• Use of Salt Substitutes to Reduce the Sodium Content in Standardized Foods; Final Rule; 04/20/2026

• Demonstrating Substantial Evidence of Effectiveness for Human Drug and Biological Products; Revised Draft Guidance for Industry; Availability; Notice; 04/24/2026 

• Food Standards of Identity Modernization; Pasteurized Orange Juice; Final Rule; 05/08/2026 

• Drug and Device Manufacturer Communications With Payors, Formulary Committees, and Similar Entities--Questions and Answers; Revised Draft Guidance for Industry; Availability; Notice; 05/11/2026 

• Forms FDA 3542 and 3542a: Questions and Answers; Draft Guidance for Industry; Availability; Notice; 05/12/2026

REPORTS 

Office of Inspector General (OIG) 

• On May 15, HHS OIG released a report titled “Impacts of Vertical Integration in Medicare Part D on Sponsors’ Drug Costs, Pharmacy Reimbursement, and Enrollee Cost Sharing.”  The report found that Part D sponsors that are vertically integrated with pharmacy benefit managers paid pharmacies more upfront while recouping more later through rebates and fees.  OIG also found that enrollees in vertically integrated plans paid lower monthly premiums but substantially higher drug out-of-pocket costs.

• On May 21, HHS OIG released an audit finding that the state of Connecticut did not ensure selected nursing homes complied with federal and state requirements prohibiting the employment of individuals with disqualifying criminal backgrounds.  The audit found that all nine selected nursing homes hired one or more individuals missing required background or registry checks, with 46 of 270 sampled employees who had direct access to residents lacking one or more required checks; OIG also noted that Connecticut had not made training materials on background check requirements available to nursing homes since 2022.  OIG made three recommendations, including that the state strengthen its monitoring activities and make training materials available to nursing homes.

ADDITIONAL POLICY NEWS

• On May 18, the U.S. Supreme Court denied petitions in six cases brought by pharmaceutical manufacturers AstraZeneca, Boehringer Ingelheim, Bristol Myers Squibb, Janssen, Novartis, and Novo Nordisk that challenged the constitutionality of the Medicare drug price negotiation program established under the IRA.  The Court denied the petitions without disclosing reasoning.  

• On May 19, the Kaiser Family Foundation (KFF) released an analysis examining how the expiration of enhanced premium tax credits at the end of 2025 has affected 2026 Affordable Care Act (ACA) Marketplace enrollment, plan selections, and out-of-pocket costs.  The analysis found that average monthly effectuated ACA Marketplace enrollment could fall by approximately 4.8 million people in 2026, with enrollees with incomes between 400-500% of the federal poverty level accounting for 27% of the drop in sign-ups despite representing just 3% of plan selections in 2025. KFF also found that average enrollee premium payments increased by 58% per month and average deductibles increased by 37%.