Health Care Watch: July 21, 2025
The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from July 13 – July 20. 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 July 16, the Energy & Commerce Committee formalized changes in Health Subcommittee leadership. Rep. Morgan Griffith (R-VA) is now the subcommittee Chairman and Rep. Diana Harshbarger (R-TN) is vice chair. Rep. John Joyce (R-PA) will take over Rep. Griffith’s spot as Chairman of the Oversight and Investigations Subcommittee.
On July 15, Appropriations Committee Chairman Tom Cole (R-OK) released updated subcommittee allocations for Fiscal Year 2026. All allocations can be found here.
On July 17, House Budget Committee Chairman Jodey Arrington (R-TX) told Bloomberg that Republicans will look to achieve additional savings in Medicaid, cuts to Medicare, and fix “errors” to the tax code stemming from the One Big Beautiful Bill. Chairman Arrington specifically mentioned Medicare site neutral payments to hospitals and FMAP reductions to the Medicaid expansion population. Both policies face opposition within the GOP.
On July 17, Reps. Deborah Ross (D-NC), Kim Schrier (D-WA), Lori Trahan (D-MA), Kathy Castor (D-FL), and Lizzie Fletcher (D-TX) introduced the Right to FDA-Approved Medicines Act. The legislation clarifies that FDA approvals of medicines preempt any attempts by states to forbid or restrict their sale or use.
On July 23, members of the Ways & Means Committee are scheduled to have a “roundtable” with CMS Administrator Dr. Mehmet Oz. Committee members are invited to “discuss priorities involving health care matters” that fall under the jurisdiction of the committee.
Senate
On July 16, the Senate voted 51-48 to pass President Trump’s $9 billion rescissions package. Sens. Lisa Murkowski (R-AK) and Susan Collins (R-ME) voted with the Democrats and opposed the bill. The House passed the Senate amended version of the package later that evening in a 216-213 vote.
On July 16, Sen. Josh Hawley (R-MO) introduced the Protect Medicaid and Rural Hospitals Act. The legislation would repeal the provider tax moratorium and the reduction of provider tax authority in the One Big Beautiful Bill Act (OBBBA), repeal provisions in the OBBBA related to state directed payments that could reduce Medicaid reimbursements, double the total investment in the Rural Health Transformation Fund to $100 billion, and extend the life of the Rural Health Transformation Fund from five years to 10 years
REGULATORY UPDATE
On July 14, the Centers for Medicare & Medicaid Services (CMS) issued the calendar year (CY) 2026 Medicare Physician Fee Schedule (PFS) proposed rule. Beginning in 2026, there will be two separate conversion factors for Qualifying alternative payment model (APM) Participants (QPs) and non-QP clinicians. The update to the qualifying APM conversion factor for CY 2026 is 0.75% while the update to the nonqualifying APM conversion factor for CY 2026 is 0.25%. The proposed CY 2026 qualifying alternative payment model (APM) conversion factor of $33.59 represents a projected increase of $1.24 (+3.83%) from the current conversion factor of $32.35. Similarly, the proposed CY 2026 nonqualifying APM conversion factor of $33.42 represents a projected increase of $1.17 (+3.62%) from the current conversion factor of $32.35. CMS is proposing to apply an efficiency adjustment of –2.5% to the work relative value unit (RVU) and corresponding intraservice portion of physician time of non-time-based services. The rule also includes: changes to the Medicare Diabetes Prevention Program; a new mandatory payment model (the Ambulatory Specialty Model (ASM)) to improve prevention and upstream management of chronic care focused on beneficiaries with heart failure and low back pain; policies to streamline the process for adding services to the Medicare Telehealth Services List; and proposals to pay skin substitute products as incident-to supplies and group and pay skin substitute products based on relevant product characteristics, consistent with their FDA regulatory status. The rule also proposes new polices for the Part B and Part D Drug Inflation Rebate Programs, including establishing a claims-based methodology to remove 340B units from Part D rebate calculations as well as establishing a Medicare Part D Claims Data 340B Repository for voluntary submissions by covered entities for Part D claims with dates of service on or after January 1, 2026 to allow CMS to begin usability testing for the 340B repository. Finally, the rule includes a comment solicitation on payment policies for Software as a Service (SaaS) medical technologies. A fact sheet detailing the proposed rule can be found here. Comments are due by September 12.
On July 14, CMS, National Institutes of Health (NIH), and Food & Drug Administration (FDA) employees received official separation notices following the Supreme Court’s ruling that the Trump Administration could move forward with its reductions in force. Employees were officially separated from the Department of Health & Human Services (HHS) as of close of business on July 14.
On July 15, CMS issued the CY 2026 Hospital Outpatient Prospective Payment System (OPPS) and Ambulatory Surgical Center (ASC) Payment System proposed rule. CMS proposes updating the OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.4% as well as proposing an updated factor to ASC rates of 2.4%. The rule also includes a number of policy proposals such as revising the annual offset percentage for non-drug items and services made as a result of the 340B payment “remedy” from 0.5% to 2% effective CY 2026; a notice of intent to conduct a Medicare OPPS drug acquisition cost survey to inform policymaking for drug payment policies for the CY 2027 rule; eliminating the inpatient only (IPO) list over three years beginning with musculoskeletal procedures; revising the criteria for additions to the ASC covered procedures list and adding 276 procedures to the ASC CPL. The rule also includes proposals to update the methodology used to calculate the Overall Hospital Quality Star Rating, and changes to requesting comment on the Hospital Outpatient Quality Reporting (OQR), Rural Emergency Hospital Quality Reporting (REHQR), and Ambulatory Surgical Center Quality Reporting (ASCQR) Programs. Finally, the rule includes a Request for Information (RFI) to seek public input on future measure concepts related to well-being and nutrition and a comment solicitation on payment policies for SaaS technologies. A fact sheet detailing the proposed rule can be found here. Comments are due September 15.
On July 15, CMS announced that 33 states, plus the District of Columbia and Puerto Rico, will participate in the Cell and Gene Therapy (CGT) Access Model. Participating states represent approximately 84% of Medicaid beneficiaries with the condition. Under the model, participating states receive guaranteed discounts and rebates from participating CGT manufacturers if the therapies fail to deliver their promised therapeutic benefits.
On July 16, HHS Secretary Robert F. Kennedy, Jr, named Matt Buckham acting chief of staff. Buckman previously served as Secretary Kennedy’s White House liaison. Secretary Kennedy’s previous Chief of Staff Heather Flick Melanson and Deputy Chief of Staff for Policy Hannah Anderson have left the Department.
On July 16, FDA announced that it is revoking, or proposing to revoke, 52 food standards after concluding they are obsolete and unnecessary. The 52 standards are for canned fruits and vegetables, dairy products, baked goods, macaroni products and other foods. The actions are the first result of the agency’s ongoing analysis of its portfolio of over 250 food Standards of Identity (SOI).
On July 17, CMS announced that a recent analysis of 2024 enrollment data identified 2.8 million Americans either enrolled in Medicaid or the Children’s Health Insurance Program (CHIP) in multiple states or simultaneously enrolled in both Medicaid/CHIP and a subsidized Affordable Care Act (ACA) Exchange plan. CMS will partner with states to reduce duplicate enrollment through three initiatives: 1) CMS will provide states with a list of individuals who are enrolled in Medicaid or CHIP in two or more states and ask states to recheck Medicaid or CHIP eligibility for these individuals; 2) CMS will notify individuals enrolled in both Medicaid or CHIP and a federally-facilitated exchange (FFE) plan with a subsidy and provided individuals with three potential actions; and 3) CMS will provide subsidized-state-based exchanges (SBEs) with a list of individuals who are potentially enrolled in the state’s Medicaid or CHIP and a subsidized Exchange plan and ask SBE plans to determine whether these individuals are dually enrolled.
On July 17, CMS issued two letters to states related to policies on continuous eligibility and workforce initiatives. CMS indicated that it does not anticipate approving new or extending existing section 1115 demonstration authorities, which expand continuous eligibility. Additionally, CMS said it does not anticipate approving new or extending existing Medicaid-funded workforce initiatives for training or employment-related activities.
On July 18, according to press reports, Immigration and Customs Enforcement (ICE) officials will be given access to the personal data of the country’s 79 million Medicaid beneficiaries. This data includes home addresses and ethnicities of beneficiaries. According to reports, the agreement was signed between CMS and the Department of Homeland Security but has not yet been publicly announced.
WHITE HOUSE
On July 16, President Trump signed the HALT Fentanyl Act into law. This legislation permanently classifies fentanyl-related substances as a Schedule I drug under the Controlled Substances Act
A list of all administrative and health care-related EOs can be found here. FHP Strategies will update this document, as needed.
RULES AT THE WHITE HOUSE OFFICE OF MANAGEMENT & BUDGET (OMB)
Pending Review
CMS
Medicaid Eligibility Changes Under the Affordable Care Act of 2010; Giving States Freedom to Use Immigration Information to Determine State Residency for Medicaid Eligibility (CMS-2349); Final Rule; 5/27/25
Medicaid Managed Care-State Directed Payments (CMS-2449); Proposed Rule; 6/9/25
Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals; the Long-Term Care Hospital Prospective Payment System; and FY 2026 Rates (CMS-1833); Final rule; 6/20/25
Contract Year 2026 Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, and Medicare Cost Plan Programs, and PACE (CMS-4208); Final Rule; 7/9/25
FY 2026 Hospice Wage Index, Payment Rate Update, and Quality Reporting Requirements (CMS-1835); Final Rule; 7/10/25
FY 2026 Skilled Nursing Facility (SNFs) Prospective Payment System and Consolidated Billing and Updates to the Value-Based Purchasing and Quality Reporting Programs (CMS-1827); Final Rule; 7/10/25
FY 2026 Inpatient Rehabilitation Facility (IRF) Prospective Payment System Rate Update and Quality Reporting Program (CMS-1829); Final Rule; 7/10/25
FY 2026 Inpatient Psychiatric Facilities Prospective Payment System Rate and Quality Reporting Updates (CMS-1831); Final Rule; 7/10/25
FDA
Requirements for Additional Traceability Records for Certain Foods: Compliance Date Extension; Proposed Rule; 5/27/25
Approaches to Assessment of Overall Survival in Oncology Clinical Trials; Draft Guidance; Notice; 6/17/25
Consideration of Enforcement Policies for In Vitro Diagnostic Tests During a Section 564 Declared Emergency; Guidance for Industry and Food and Drug Administration Staff; Availability; Notice; 6/30/25
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
HRSA
340B Rebate Guidance; Notice; 6/1/25
REPORTS
Congressional budget Office
On July 18, CBO released a report examining the impact on NIH funding on FDA’s review times for new drugs. CBO estimates that a reduction in NIH's funding of external preclinical research would ultimately decrease the number of new drugs coming to market by roughly 4.5%, or about 2 drugs per year. CBO stated that this result would not be immediate; rather, the impact of the reduction in funding would grow over a 30-year period and would take full effect in the third decade after the reduction began. A reduction in other components of the NIH's budget would further decrease the number of new drugs coming to market; CBO has not assessed the magnitude of that effect.
HEARINGS
House
Ways & Means Committee
Joint Health and Oversight Subcommittees
July 22; 2:00 PM; 1100 Longworth
Hearing on Medicare Advantage: Past Lessons, Present Insights, Future Opportunities
Energy & Commerce Committee
Subcommittee on Oversight and Investigations
Ensuring Patient Safety: Oversight of the U.S. Organ Procurement and Transplant System
Appropriations Committee
Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies
July 21; 5:00 PM
Subcommittee Markup of FY 2026 Labor, HHS, Education, and Related Agencies Bill
July 24; 10:00 AM; 2359 Rayburn
Full Committee Markup of FY 2026 Labor, HHS, Education, and Related Agencies Bill
ADDITIONAL POLICY NEWS
On July 11, U.S. District Court Judge Sean Jordan ruled that a Biden-era rule that would have removed medical debt from consumers' credit reports exceeded the Consumer Financial Protection Bureau’s (CFPB) authority. Judge Jordan argued that the Fair Credit Reporting Act does not permit the CFPB to remove medical debt from reports.
On July 17, the Medicare Payment Advisory Commission (MedPAC) released its 2025 data book on health care spending and the Medicare program. The report provides data on Medicare spending, demographics of the Medicare population, beneficiaries' access to care, and quality of care in the program.