Health Care Watch: May 12, 2025
The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from May 4 – May 10. 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 7, a group of 32 House GOP fiscal hawks, led by Budget Committee Vice Chair Lloyd Smucker (R-PA), sent a letter to Speaker Mike Johnson (R-LA) and Majority Leader Steve Scalise (R-LA) stating that they will not vote for the final reconciliation package if it increases the deficit.
The Budget Reconciliation process is underway in the House, as multiple Committees have begun marking up policies within their jurisdiction to reach their savings targets. The Energy & Commerce and Ways & Means Committees are scheduled to markup their bills beginning at 2pm on May 13. Close to final legislation is likely to be released on May 12. Internal GOP disputes regarding potential cuts to Medicaid continue, appear to be headed towards work requirements for able-bodied adults and reducing the safe harbor for provider taxes from 6% to 5% (and freezing rates below 5%). FMAP reductions and capping federal expenditures for the expansion population appear to be off the table at the moment. Thus far, GOP members have largely rejected the President’s calls to tie Medicaid drug reimbursements to prices in other countries instead of cutting Medicaid. PBM reforms, including eliminated spread pricing and greater transparency, and a short-term Medicare “doc fix” remain in play.
On May 9, the Ways & Means Committee released a portion of the legislation it will mark up on May 13, including a policy that would restrict Medicare coverage for illegal immigrants.
Senate
On May 6, Sens, Josh Hawley (R-MO) and Peter Welch (D-VT) introduced bipartisan legislation that would require the retail list price for certain prescription drugs and biological products to not exceed the average retail list price for the drug or biological product among certain nations. The legislation would impose a penalty if companies were to violate the limit and takes a different approach from the White House’s most-favored nations (MFN) proposal which would tie Medicaid (and soon Medicare) drug prices to lower prices abroad.
On May 6, the Finance committee held a hearing to consider the nomination of James O'Neill, of California, to be Deputy Secretary of the Department of Health and Human Services (HHS) and Gary Andres to be an HHS Assistant Secretary of Legislation.
On May 7, the Congressional Budget Office (CBO) responded to a request from Finance Committee Ranking Member Ron Wyden (D-OR) and Energy & Commerce Committee Ranking Member Frank Pallone (D-NJ) asking CBO to analyze Republican proposed Medicaid reform options that would: 1) set the federal Medicaid matching rate for the expansion population equal to that for other enrollees; 2) limit state taxes on health care providers; 3) establish caps on federal spending for the entire Medicaid population; 4) establish caps on federal spending for the Medicaid expansion population; and 5) repeal Medicaid’s eligibility and enrollment rule. CBO found that under the first four policy options, federal contributions to the Medicaid program would be smaller, and reduce federal budget deficits. CBO anticipates that states would replace about half of the reduced funds and would respond in four ways: spend more state money on Medicaid, mainly using a mix of revenue increases and reduced spending on other programs for financing; reduce payment rates to health care providers; limit the scope or amount of optional benefits; and reduce enrollment in Medicaid. CBO stated that, under the fifth policy option, which also would reduce the federal budget deficit, only Medicaid enrollment would be reduced as a result of the policy change. Each option would result in millions of beneficiaries losing their Medicaid coverage. These individuals may gain coverage through their employer or the Affordable Care Act marketplaces, so CBO estimates that the increase in the number of uninsured is 2.4 million under option 1; 3.9 million under option 2; 2.9 million under option 3; 1.5 million under option 4; and 0.6 million under option 5.
On May 8, Finance Committee Ranking Member Ron Wyden (D-OR), Sen. Elizabeth Warren (D-MA), Ways & Means Health Subcommittee Ranking Member Lloyd Doggett (D-TX), and Rep. Jan Schakowsky (D-IL) led a group of Democratic lawmakers in sending a letter to Senate Majority Leader John Thune (R-SD) and House Speaker Johnson, urging them to address waste, fraud, and abuse in Medicare Advantage (MA) instead of forging ahead with cuts to Medicaid. Specifically, the letter asks leaders to “crack down” on upcoding within the Medicare program.
REGULATORY UPDATE
On May 4, HHS spokesperson Andrew Nixon announced that HHS Secretary Robert F. Kennedy, Jr., will enlist the Department to activate a scientific process to treat a host of diseases, including measles, with single or multiple existing drugs in combination with vitamins and other modalities.
On May 5, HHS’ Administration for Community Living (ACL) announced the release of $1.1 billion in funding and new grant opportunities to provide critical services to older adults, people with disabilities, and their family caregivers. The Older Americans Act formula grant funding will be issued to all 50 states and six territories, as well as 293 tribes and tribal organization nationwide. These grants support a wide array of low-cost services and address significant needs such as nutrition, assistance with daily living activities, chronic disease management, and the prevention of abuse, neglect, and exploitation.
On May 5, it was announced that Jeremy Walsh will serve as the head of artificial intelligence (AI) and information technology at FDA. This is the first time FDA has appointed a chief AI officer.
On May 6, FDA announced its intent to expand the use of unannounced inspections at foreign manufacturing facilities that produce foods, essential medicines, and other medical products intended for American consumers and patients. This change builds upon the agency’s Office of Inspection and Investigations Foreign Unannounced Inspection Pilot program in India and China. Additionally, FDA will evaluate the agency’s policies and practices for improvements to the foreign inspection.
On May 6, it was announced that Dr. Vinay Prasad will serve as the next director of the Center for Biologics Evaluation and Research (CBER) at FDA, overseeing the regulation of vaccines, gene therapies, and blood supply. Prasad previously served as an epidemiology professor at the University of California at San Francisco.
On May 7, the National Institutes of Health (NIH) and Centers for Medicare & Medicaid Services (CMS) announced a partnership to enable NIH to build a real-world data platform enabling advanced research across claims data, electronic medical records, and consumer wearables. This partnership will focus first on enabling research surrounding the root causes of autism spectrum disorder (ASD). HHS stated that researchers will focus on: 1) autism diagnosis trends over time; 2) health outcomes from specific medical and behavioral interventions; 3) access to care and disparities by demographics and geography; and 4) the economic burden on families and healthcare systems.
On May 7, the Centers for Disease Control & Prevention (CDC) received approval from HHS to hire its latest cohort of epidemic intelligence officers (EIO), according to an email. The officers will join CDC for two years to undergo a training program and work closely with the agency’s epidemiologists.
On May 8, FDA announced an aggressive timeline to scale use of AI internally across all FDA centers by June 30, 2025, following the completion of a new generative AI pilot for scientific reviewers.
HHS Secretary Kennedy is expected to name Rich Danker as the department’s new top spokesman.
WHITE HOUSE
On May 5, President Trump issued an Executive Order (EO) entitled Improving the Safety and Security of Biological Research which ends federal funding for gain-of-function research in countries where the White House deems there is not adequate oversight to ensure that the countries are compliant with United States oversight standards and policies. The EO also pauses research using infectious pathogens and toxins in the U.S. and requires the Director of the Office of Science and Technology Policy (OSTP), within 120 days, to revise or replace the 2024 “United States Government Policy for Oversight of Dual Use Research of Concern and Pathogens with Enhanced Pandemic Potential. This EO contains enforcement and reporting mechanisms in an attempt to strengthen oversight. A fact sheet detailing the EO can be found here.
On May 5, President Trump issued an EO entitled Regulatory Relief to Promote Domestic Production of Critical Medicines. The EO directs FDA to reduce the amount of time it takes to approve domestic pharmaceutical manufacturing plants by eliminating duplicative and unnecessary requirements, streamlining reviews, and working with domestic manufacturers to provide early support before facilities come online. The EO also directs the FDA to increase fees for and inspections of foreign manufacturing plants, and to improve enforcement of active pharmaceutical ingredient source reporting by foreign drug producers. The EO also directs the Environmental Protection Agency (EPA) to accelerate the construction of pharmaceutical manufacturing facilities. A fact sheet detailing the EO can be found here.
On May 8, the Trump Administration nominated Dr. Casey Means to serve as Surgeon General. President Trump pulled his prior nominee, Dr. Janette Nesheiwat, the day before.
On May 9, Treasury Secretary Scott Bessent announced that the federal government will have exhausted its extraordinary measures and will default on its debt sometime in August unless Congress raises the debt limit.
President Trump is rumored to sign an EO next week directing CMS to once again pursue a Medicare “most favored nation” (MFN) drug pricing plan, which aims to lower drug prices by tying the amount Medicare will pay for some medications to lower drug prices abroad. President Trump tried to implement the MFN policy in the final months of his first term, but a judge halted the effort after determining the administration had failed to follow the proper processes for implementing it.
A list of all administrative and health care-related EOs can be found here. FHP Strategies will update this document, as needed.
HEARINGS
Senate
HELP Committee
May 14; 1:30 PM; 430 Dirksen
Hearing on Fiscal Year 2026 Department of Health and Human Services Budget
Witness: HHS Secretary Kennedy.
Judiciary Committee
May 13; 10:00 AM; 226 Dirksen
PBM Power Play: Examining Competition Issues in the Prescription Drug Supply Chain
House
Appropriations Committee
Subcommittee on Labor, HHS, and Related Agencies
May 14; 9:30 AM; 2358-C Rayburn
Budget Hearing: U.S. Department of Health & Human Services
Witness: HHS Secretary Kennedy
Energy & Commerce Committee
Markup of policies related to budget reconciliation (Medicaid; Medicare)
May 13; 2:00 PM
Ways & Means Committee
Markup of policies related to budget reconciliation (taxes, Medicare)
May 13; 2:00 PM
RULES AT THE WHITE HOUSE OFFICE OF MANAGEMENT & BUDGET (OMB)
Pending Review
CMS
Preserving Medicaid Funding for Vulnerable Populations – Closing a Health Care-Related Tax Loophole (CMS-2448); Proposed Rule; 4/19/25
CY 2026 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates (CMS-1834); Proposed Rule; 4/21/25
CY 2026 Changes to the End-Stage Renal Disease (ESRD) Prospective Payment System and Quality Incentive Program (CMS-1830); Proposed Rule; 4/24/25
CY 2026 Home Health Prospective Payment System Rate and Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Program Updates (CMS-1828); Proposed Rule; 4/25/25
CY 2026 Revisions to Payment Policies Under the Physician Fee Schedule and Other Revisions to Medicare Part B (CMS-1832); Proposed Rule; 4/25/25
Request for Information: Health Technology Ecosystem (CMS-0042); Notice; 5/2/25
Patient Protection and Affordable Care Act; Marketplace Integrity and Affordability (CMS-9884); Final Rule; 5/2/25
REPORTS
Office of Inspector General (OIG)
On May 6, OIG released potential cost savings in HHS programs related to legislative actions. OIG found that $17 billion in potential cost savings could be generated if Congress takes action based on HHS-OIG reports. Specifically, OIG found that there could be; 1) $6.9 billion in potential cost savings by improving risk adjustment in MA; 2) $4.9 billion in potential cost savings by ensuring that inpatient hospital stays are appropriately billed; 3) $2.9 billion in potential cost savings by improving the oversight of hospital billing under “two-midnights” policy; 4) $1.3 billion in potential cost savings by paying provider-based facilities at the Medicare freestanding, non-facility rate; and 5) $1 billion in potential cost savings by preventing duplicate Medicaid managed care enrollments.
On May 7, OIG released a report examining Medicare Part D plan formularies. OIG found that nearly all Part D Prescription Drug Plans (PDPs) (96%) and 88% of Medicare Advantage Prescription Drug (MA-PD) plans, covered at least one of the 10 available Humira biosimilars on their 2025 formulary—including some plans that covered Humira biosimilars only and not Humira. OIG stated that this represents substantial growth in formulary coverage from 2024, when only 65% of PDPs and 52% of MA-PD plans covered at least one of Humira’s biosimilars. However, OIG stated that 1% of PDP enrollees and 10% of MA-PD enrollees were in plans that covered Humira only in 2025, which in effect prevents these enrollees’ use of Humira biosimilars. Finally, OIG found that almost none of the formularies that covered Humira and its biosimilars used preferential tier placement to encourage biosimilar use.
ADDITIONAL POLICY NEWS
On May 5, 19 Democratic-led states and the District of Columbia filed a lawsuit against HHS Secretary Kennedy stating that his continued reorganization of the federal health bureaucracy incapacitated core functions and deprived the states of federal funds and expertise. The lawsuit alleges that Secretary Kennedy’s structural changes stopped health agencies from carrying out legally required functions and states that "dismantling HHS by terminating the people necessary for it to meet its own mandates, and paralyzing it by means of a confusing reorganization, is an unlawful effort to undercut the will of Congress who ordered the agencies and programs to run."