Health Care Watch: July 4, 2026

The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from June 28 – July 4.  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 June 29, the House passed H.R. 5347, Health Care Efficiency Through Flexibility Act, by unanimous consent.  This bill would allow accountable care organizations (ACOs) under the Medicare Shared Savings Program to continue using existing quality measure reporting methods through 2029, delaying a 2025 Centers for Medicare & Medicaid Services (CMS) requirement to transition to a specific electronic reporting system.  The bill would also direct CMS to establish a pilot program from 2028 to 2032 to test alternative digital quality measure reporting methods, with participating ACOs exempt from other reporting requirements during the pilot period and require CMS to publicly post an analysis and any recommendations upon the program's completion.

• On June 30, the Energy & Commerce Committee postponed a full committee markup of nine bills, which included legislation to address illicit drugs, due to the House being out of session.  The committee has not determined a date for the rescheduled markup.  

• On July 1, 2026, the Education & Workforce Health, Employment, Labor, and Pensions (HELP) Subcommittee held a hearing entitled, Direct Contracting: A Prescription for Lower Health Care Costs.  The hearing included discussion on direct contracting models and outcomes, small employer access and benefits, health coverage losses and the One Big Beautiful Bill, transparency and payment system costs, and broader cost reform proposals.

• On July 1, 2026, the Ways & Means Committee held a markup which included H.R. 9504, the Tax-Exempt Hospital Transparency Act.  The legislation would expand Internal Revenue Service (IRS) reporting requirements for nonprofit hospitals by requiring additional disclosures related to community benefit spending, subsidized service lines, financial assistance programs, and utilization of the 340B Drug Pricing Program.  Republican members argued the bill would improve public accountability for tax-exempt hospitals and Democratic members raised concerns that the proposal contains burdensome compliance reporting rather than addressing health care affordability.  The bill advanced along party lines.  

• On July 1, Ways & Means Health Subcommittee Ranking Member Lloyd Doggett (D-TX), joined by more than 40 House Democrats, introduced the Saving Medicare Enrollees from Deceptive Insurers and Creating Ample Resources for Everyone Act (Saving MEDICARE Act), legislation that would reduce Medicare Advantage (MA) overpayments and strengthen program oversight by implementing several recommendations advanced by MedPAC and other policy organizations.  Key provisions would limit the use of diagnosis codes obtained through chart reviews for risk adjustment, eliminate MA quality bonus payments, reform benchmark payment calculations, strengthen risk adjustment data validation audits, and allow state insurance commissioners to share enforcement responsibilities with CMS.  A fact sheet can be found here.  A press release can be found here.

• The House is in recess until July 13.  

Senate 

• On June 25, Health, Education, Labor, & Pensions (HELP) Committee Ranking Member Bernie Sanders (I-VT) releasedinternal Centers for Disease Control and Prevention (CDC) and U.S. Department of Health & Human Services (HHS) emails documenting that HHS Secretary Robert F. Kennedy, Jr., altered vaccine recommendations without CDC expert review, directed the agenda of the Advisory Committee on Immunization Practices (ACIP) vaccine advisory panel, directed cancellation of flu vaccine campaigns, required political approval of major CDC decisions before implementation, and fired CDC Director Susan Monarez in August 2025.  The emails also include a query from Secretary Kennedy's senior advisor on the legal process for removing vaccines from the Vaccines for Children program.  Sen. Sanders obtained the documents through a private letter sent following September 2025 HELP Committee testimony from Monarez and former CDC Chief Medical Officer Dr. Debra Houry.

• The Senate is in recess until July 13.  

REGULATORY UPDATE

• On June 29, HHS Secretary Kennedy kicked off the return of the Presidential Fitness Test and launched GetActive.gov/kids at the Boys & Girls Club of Atlantic City as part of the Make America Healthy Again (MAHA) agenda.

• On June 29, U.S. Food & Drug Administration (FDA) announced the selection of seven companies to participate in the FDA PreCheck Pilot Program, an initiative launched in February 2026 to support the development of new U.S. pharmaceutical manufacturing facilities by providing earlier FDA engagement and a more predictable regulatory pathway, with more than 80 companies having applied.  Selected participants, including Amneal Pharmaceuticals, Cellares Corp., Eli Lilly and Company, FUJIFILM Biotechnologies, Kriya Therapeutics, Kyowa Kirin, and Regeneron Pharmaceuticals, will develop domestic manufacturing facilities spanning small molecule sterile products, cell and gene therapies, and biotechnology drug substances, and will engage with FDA through a two-phase model covering facility readiness reviews and enhanced pre-submission meetings.

• On June 30, FDA approved Tregzi, the first regulatory T (Treg) cell-based immunotherapy for improving chronic graft-versus-host disease (GVHD)-free survival in adult patients with blood cancers undergoing allogeneic hematopoietic stem cell transplantation (allo-HSCT) to Orca Biosystems, Inc.  Tregzi is a donor-derived cellular immunotherapy composed of three cell components: purified hematopoietic stem and progenitor cells (HSPCs), Treg cells, and conventional T (Tcon) cells, each derived from the mobilized peripheral blood of an 8/8 HLA-matched related or unrelated donor.  The product received Orphan Drug and Regenerative Medicine Advanced Therapy (RMAT) designations.

• On June 30, HHS Secretary Kennedy signed determinations terminating the COVID-19 Emergency Use Authorization (EUA) declarations for drugs and biological products and for medical devices, concluding that the circumstances justifying the emergency authorities no longer exist.  The declaration for drugs and biological products will terminate 12 months after the Secretary's determination, while the declaration for medical devices will terminate 180 days after the Secretary's determination.  During these transition periods, HHS and FDA will work with manufacturers on appropriate regulatory pathways for products seeking traditional approval, clearance, or licensure.

• On June 30, an FDA spokesperson announced that Dr. Vijay Kumar, acting director of the Office of Therapeutic Products within the Center for Biologics Evaluation and Research (CBER), intends to step down from the role, while remaining with the agency in his prior capacity as lead physician, with acting CBER Director Karim Mikhail to serve as acting Office of Therapeutic Products director while FDA searches for a permanent replacement internally and externally.

• On July 1, HHS and FDA announced support for the Drug Enforcement Administration's (DEA) issuance of two Notices of Intent (NOIs) to begin the temporary scheduling process for certain kratom-related substances, including placing 7-hydroxymitragynine (7-OH) above a specified threshold in Schedule I of the Controlled Substances Act (CSA) and temporarily placing Mitragynine pseudoindoxyl, Dihydro-7-hydroxymitragynine, and the 9-fluoro derivative of 7-hydroxymitragynine into Schedule I.  The Office of the Assistant Secretary for Health (OASH) issued a Request for Information (RFI) seeking public comment on the proposed 7-OH threshold level; following a 30-day comment period, OASH will provide comments to the Attorney General for consideration before any temporary scheduling order may be issued.  

• On July 1, CMS launched the Medicare GLP-1 Bridge, a new program through which eligible Medicare Part D beneficiaries may obtain certain GLP-1 medications for weight management at a cost of $50 per month.  The initiative, which will remain available through December 31, 2027, is designed to expand access to GLP-1 drugs for weight management and test the impacts of increased access on the Medicare program.  Beneficiaries who already receive GLP-1 coverage through their existing Part D benefit are not eligible.

• On July 1, CMS released a proposed rule for the Calendar Year (CY) 2027 Home Health Prospective Payment System (PPS) that would expand CMS's authority to recover improper payments and remove noncompliant providers from Medicare, including by extending retroactive recoupment to all enrollment revocations and adding new revocation grounds, with an estimated $82 million in annual savings.  CMS proposes to increase total Medicare payments to home health agencies by approximately 2.4%, or $420 million, compared to CY 2026, while continuing the transition to the Patient-Driven Groupings Model (PDGM) in a budget-neutral manner.  The proposed rule also clarifies that skilled palliative care services may be furnished and billed under existing Medicare home health benefits for patients with serious illnesses and proposes shortening the Outcome and Assessment Information Set (OASIS) data submission deadline from 4.5 months to 45 days, which CMS estimates could make publicly reported quality information available up to three months sooner.  Comments on the rule are due by August 31.  A press release can be found here.  A fact sheet can be found here.  

• On July 2, CMS released a proposed rule for CY 2027 Hospital Outpatient PPS (OPPS) and Ambulatory Surgical Center (ASC) payment systems.  CMS proposes updating OPPS payment rates for hospitals that meet applicable quality reporting requirements by 2.4% and estimates total OPPS payments will be approximately $110.9 billion in CY 2027, an increase of about $9.5 billion over CY 2026.  The rule also includes a proposal to reduce OPPS payments for drugs acquired under the 340B Drug Pricing Program to Average Sales Price (ASP) minus 33.4%.  If finalized, CMS estimates the policy would result in a $4.85 billion reduction in OPPS drug payments in CY 2027, which would be offset through an 8.44% increase in OPPS payment rates for non‑drug items and services.  CMS estimates that the proposed policy would also reduce beneficiary copayments by $1.15 billion.  CMS also proposes to increase the existing 340B “remedy” offset for non-drug items and services, originally adopted in the November 2023 340B Remedy final rule to address the 2018-2022 340B payment policy, from a 0.5% reduction to a 3% reduction in the OPPS conversion factor beginning in CY 2027.  The rule includes addition proposals including the expansion of prior authorization to include certain botulinum toxin injection service codes, and equalizing payment rates between physician offices and off-campus provider-based departments for certain imaging services, among other proposals.  Comments on the rule are due by August 31.  A press release can be found here.  A fact sheet can be found here.  

• On July 1, FDA issued a supplemental approval for Casgevy (exagamglogene autotemcel) for patients aged 2 years and older with either sickle cell disease (SCD) with recurrent vaso-occlusive crises (VOCs) or transfusion-dependent β thalassemia (TDT), to Vertex Pharmaceuticals, Inc.  This is the first gene therapy approved for patients aged 2 years and older with SCD.  The approval decision was granted 53 days after filing and represented the eighth approval selected for the Commissioner's National Priority Voucher (CNPV) pilot program.  

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

• 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 

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

• Short-Term, Limited-Duration Insurance (CMS-9881); Proposed Rule; 05/30/2026

• Request for Information; Clinical Laboratory Improvement Amendments (CLIA) of 1988 Regulations (CMS-3485); Notice; 06/01/2026

• Guarding U.S.  Medicare Against Rising Drug Costs (GUARD) Model (CMS-5546); Final Rule; 06/15/2026

• Prohibition on Federal Medicaid and Children's Health Insurance Program Funding for Specified Sex-Rejecting Procedures Furnished to Children and Youth (CMS-2451); Final Rule; 06/16/2026

• FY 2027 Skilled Nursing Facility (SNFs) Prospective Payment System and Consolidated Billing and Updates to the Value-Based Purchasing and Quality Reporting Programs (CMS-1843); Final Rule; 06/18/2026

• Hospital Inpatient Prospective Payment Systems for Acute Care Hospitals; the Long-Term Care Hospital Prospective Payment System; and FY 2027 Rates (CMS-1849); Final Rule; 06/24/2026

• FY 2027 Inpatient Psychiatric Facilities Prospective Payment System Rate and Quality Reporting Updates (CMS-1847); Final Rule; 06/24/2026

• Global Benchmark for Efficient Drug Pricing (GLOBE) Model (CMS-5545); Final Rule; 06/26/2026

• Cutting Administrative Requirements for Excellence in Patient Care (CMS-3484); Proposed Rule; 07/02/2026

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

• 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

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

• Action Levels for Cadmium in Processed Food Intended for Babies and Young Children; Draft Guidance for Industry; Notice; 05/22/2026

• Biosimilar and Interchangeable Biosimilar Products: Considerations for Container Closure Systems and Device Constituent Parts; Draft Guidance for Industry; Availability; Notice; 05/27/2026

• Requirements for Additional Traceability Records for Certain Foods: Enforcement Policy for Certain Retail Food Establishments and Restaurants; Notice; 06/01/2026

• New Dietary Ingredient (NDI) Notifications and Related Issues; Identity and Safety Information About the NDI: Guidance for Industry; Notice; 06/02/2026

• Requirements For Additional Traceability Records For Certain Foods: Compliance Date Extension; Final Rule; 06/03/2026

• Rulemaking to Provide by Regulation that an Ingredient Is Not Excluded From the Dietary Supplement Definition; Proposed Rule; 06/05/2026

HEARINGS

Senate

• Armed Services Committee

Personnel Subcommittee 

Hearing on the TRICARE Pharmacy Program

July 15; 2:30 PM EST; 222 Russell

Witnesses: Rear Admiral (Dr.) David J. Smith, USN (Ret.), Deputy Director, Defense Health Agency; Dr. Adam Kautzner, President, Express Scripts and Evernorth Care Management; Dr. Micah Lansford, Pharmacist and Owner, Roden-Smith Pharmacy; Greg Reybold, Vice President of Public Policy, American Pharmacy Cooperative, Inc.

REPORTS 

Office of Inspector General (OIG) 

• On June 29, HHS OIG released a report examining whether the 327 unique formularies used by 5,038 Part D plans operating in 2026 cover 192 of the 200 drugs most used by dual-eligible enrollees.  They found that most plans covered almost all those drugs and only a small number were not covered by most formularies, consistent with OIG's annual findings since 2011.  OIG concluded that dual-eligible enrollees can generally expect access to most used drugs in 2026 regardless of which Part D plan they are enrolled in and made no recommendations.

• On June 30, HHS OIG released an inspection report on the Florida Medicaid Fraud Control Unit (MFCU) covering FYs 2022–2024, finding that the MFCU maintained strong federal partnerships and a continuous case flow but did not always adhere to MFCU performance standards or comply with applicable requirements.  Specific findings included a need for further improvement in the quality of fraud and patient abuse referrals, inconsistent but improving reporting of adverse actions to the National Practitioner Data Bank within required timeframes, and a training plan lacking annual minimum hour requirements for some investigators.  The MFCU concurred with all three OIG recommendations to address these gaps.

Government Accountability Office (GAO)

• On June 29, GAO released a report titled “National Alzheimer’s Project: HHS Needs to Better Assess and Communicate Progress.”  The National Alzheimer's Project is the multi-agency federal initiative established by law in 2011 and reauthorized through 2035.  The report found that while the project has contributed to notable results, including the first two treatments aimed at slowing early-stage Alzheimer's disease progression, HHS has not set near-term performance goals, collected and used performance information to assess progress, or clearly communicated project results to stakeholders.  GAO made four recommendations: that HHS (1) provide its Advisory Council with the implementation status of individual recommendations; (2) set near-term goals for each long-term project goal; (3) collect and use performance information to assess progress and inform management decisions; and (4) communicate project progress to stakeholders in a clear, digestible format.  HHS neither agreed nor disagreed with the recommendations.

• On July 1, GAO released a report titled “Suicide Prevention: Capacity and Federal Assessment of the 988 Lifeline.”  The report found that approximately 19.1 million calls, texts, and chats were routed to crisis contact centers from July 2022 through September 2025, with call volume increasing about 87%, text volume about 260%, and chat volume about 23%, and that call answer rates increased while text and chat answer rates fluctuated over the period.  GAO found that SAMHSA incorporated key performance management practices including a goal for crisis contact centers to answer more than 90% of texts and chats by September 2026.  GAO made no recommendations.

• On July 2, GAO released a report titled “Assisted Living Facilities: Information on Federal Spending and Medicaid Coverage.”  The report found that combined federal Medicaid and Medicare spending for services provided in assisted living facilities totaled at least $12 billion in 2024, though GAO noted this figure is likely an undercount due to data limitations, as assisted living facilities are not uniformly defined as a provider type across data systems.  As of March 2025, 44 states' Medicaid programs covered assisted living services for older adults and people with disabilities, with 29 of those 44 states doing so through home- and community-based services (HCBS) waivers.  GAO also noted that other federal programs, including HUD and VA programs, may help beneficiaries cover certain assisted living costs, though the amounts spent by those programs on such services are unknown.

ADDITIONAL POLICY NEWS

• On July 1, 25 Democratic-led states and the District of Columbia filed suit in federal court in Massachusetts, asking the court to set aside the Trump administration's rule implementing Medicaid work requirements, arguing that the rule's exemptions for people who are too ill to work are too narrow, violate administrative law, and conflict with congressional intent.  The suit was filed by 23 Democratic attorneys general and the Democratic governors of Kentucky and Pennsylvania and contends that the rule will cause immediate and irreparable harm to state Medicaid programs, strain safety net providers, increase uncompensated emergency care, and accelerate rural hospital closures, as states face a January 1 deadline to implement the new eligibility restrictions.