Health Care Watch: July 25, 2026
The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from July 19 – July 26 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 21, the Energy & Commerce Committee voted to favorably report 17 health-related bills, including legislation dealing with price transparency for commercial health insurance plans (including drug prices) and prior authorization (PA) in Medicare Advantage (MA). A summary of the bills can be found here.
On July 22, the Committee on Oversight and Government Reform voted 40-2 to favorably report the Pharmacists Fight Back in Federal Employee Health Benefit Plans Act. The bill would establish new requirements for pharmacy benefit managers (PBMs) participating in the Federal Employees Health Benefits Program, including requirements to reimburse pharmacies and apply manufacturer rebates to reduce beneficiaries' prescription drug costs, a prohibition on steering patients toward affiliated pharmacies, and penalties for noncompliance.
On July 22, the House passed 12 health-related bills, including the Destruction of Hazardous Imports Act, the U.S. Food & Drug Administration (FDA) Modernization Act 3.0, and the ACT for ALS Reauthorization Act of 2026.
The House has begun its August recess and will return to session on August 31.
Senate
On July 22, the Health, Education, Labor, & Pensions (HELP) Committee voted to favorably report 11 health-related bills during an executive session. The bills advanced included the Expedited Access to Biosimilars Act, the INSULIN Act of 2026, the SAFE Drugs Act of 2026, the Patients Deserve Price Tags Act, the CLEAR LABELS Act, and the Childhood Diabetes Reduction Act.
On July 23, the HELP Committee postponed voting on President Donald J. Trump’s nominee to lead the Centers for Disease Control and Prevention (CDC), Dr. Erica Schwartz. The delay is due to Sen. Lisa Murkowski (R-AK) being absent due to a family emergency and her vote being needed to advance Dr. Schwartz’s nomination.
On July 23, Sen. Patty Murray (D-WA) led more than 250 congressional Democrats in filing an amicus brief with the U.S. Court of Appeals for the Fifth Circuit in Louisiana v. FDA, a case concerning Louisiana's request to reinstate the nationwide, in-person dispensing requirement for mifepristone. The lawmakers argued that mifepristone has undergone FDA's approval and post-market monitoring process and has been found safe and effective, and that reinstating the dispensing requirement would undermine FDA's evidence-based drug regulation authority. LINK
REGULATORY UPDATE
On July 21, the Department of Health & Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) deferred more than $1 billion in federal Medicaid payments to California and Minnesota pending additional documentation supporting certain high-risk claims. CMS deferred approximately $867.5 million to California, following a review of claims for certain in-home care programs that identified spending growth exceeding national trends, and approximately $199 million to Minnesota, following a review of claims in 14 high-risk service areas. CMS stated that the deferrals are temporary and not permanent funding reductions, and that both states will have the opportunity to submit documentation demonstrating that the claims meet federal Medicaid requirements.
On July 21, the Health Resources & Services Administration (HRSA) updated the charter for its Advisory Commission on Childhood Vaccines, the panel that advises HHS on amendments to the National Vaccine Injury Compensation Program (VICP).
On July 21, CMS published a proposed rule to implement section 71115 of the One Big Beautiful Bill Act, establishing new indirect hold harmless thresholds for Medicaid provider taxes. The proposed rule would codify statutory limits on new and increased health care-related taxes generally based on taxes enacted and imposed as of July 4, 2025; discontinue the "75/75" second prong of the indirect hold harmless test; establish services of health insurers as a permissible class; and create new state reporting requirements. The CMS Office of the Actuary estimated that the rule would reduce federal spending by $246 billion over the next 10 years. Comments are due by September 21. A fact sheet can be found here.
On July 21, HHS and CMS filed a notice of appeal to the U.S. Court of Appeals for the Eleventh Circuit in Clover Insurance Company v. HHS. The appeal challenges a district court ruling that invalidated 20 of the 45 measures used in the MA Star Ratings program and ordered CMS to recalculate Clover’s 2026 Star Ratings.
On July 22, HHS announced efforts to support the Genesis Mission, a federal initiative launched in November 2025 to apply artificial intelligence (AI) and advanced computing to scientific research. In partnership with the White House Office of Science and Technology Policy (OSTP), HHS will launch a series of National Science and Technology Challenges applying AI to health issues, with a flagship challenge focused on identifying the root causes of chronic disease and additional challenges on pediatric cancer research and drug discovery and development. HHS also announced the National Institutes of Health (NIH)-led Bio Genesis Mission, through which agencies including NIH, FDA, and ARPA-H will contribute scientific datasets to modernize the biomedical research ecosystem.
On July 22, HHS announced that CMS had sent a notification to state Medicaid directors urging them to phase out the use of mercury-containing dental fillings by restricting or ending Medicaid coverage for dental amalgam procedure codes. The notification recommended that state Medicaid programs consider restricting or ending coverage for dental amalgam codes or incentivizing providers to use resin-based composite codes and stated that a state plan amendment is likely not necessary to make the change.
On July 22, FDA announced that it had selected Dexcom, Inc. as the first participant in the Technology-Enabled Meaningful Patient Outcomes (TEMPO) for Digital Health Devices Pilot, which FDA operates in connection with the CMS Innovation Center's Advancing Chronic Care with Effective, Scalable Solutions (ACCESS) Model. The pilot has manufacturers collect and report real-world data on the intended uses of their devices, and Dexcom's Glucose Health Program is intended to address two clinical use areas in the ACCESS Model, including screening for prediabetes and type 2 diabetes. FDA stated that it plans to select up to about ten participants in each of the ACCESS Model's four clinical use areas.
On July 22, the Department of Education's Office for Civil Rights (OCR) announced investigations into five medical schools over alleged racial discrimination in admissions under Title VI of the Civil Rights Act of 1964. The Department stated that the investigations are part of a joint effort with the HHS Office for Civil Rights and the Department of Justice (DOJ) Civil Rights Division.
On July 23-24, FDA’s Pharmacy Compounding Advisory Committee voted in favor of adding several popular peptides, including BPC 157 and TB-500, to the list of bulk drug substances eligible for pharmacy compounding under Section 503A. The panel’s votes came despite FDA staff recommendations against broader access based on limited human safety and efficacy data and ongoing concerns about their use in the growing peptide marketplace. FDA generally follows advisory committee recommendations but has no obligation to do so.
WHITE HOUSE
On July 21, President Trump stated in a social media post that generic drugs imported into the U.S. would remain subject to a 0% tariff for a two-year period beginning August 1, after which the tariff would rise to 100% for one year and 200% thereafter. He stated that the stated purpose was to “reshore” domestic generic pharmaceutical manufacturing, and that existing policy on patented, branded, and innovative drugs would remain unchanged.
RULES AT THE WHITE HOUSE OFFICE OF MANAGEMENT & BUDGET (OMB)
Pending Review
CMS
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
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
FY 2027 Inpatient Rehabilitation Facility (IRF) Prospective Payment System Rate Update and Quality Reporting Program (CMS-1845); Final Rule; 07/09/2026
FY 2027 Hospice Wage Index, Payment Rate Update, and Quality Reporting Requirements (CMS-1851); Final Rule; 07/09/2026
Patient Protection and Affordable Care Act; State Innovation Waivers and Health Care Choice Compacts (CMS-9877); Proposed Rule; 07/13/2026
Contract Year 2028 Policy and Technical Changes to the Medicare Advantage Program, Medicare Prescription Drug Benefit Program, Medicare Cost Plan Program, and PACE (CMS-4214); Proposed Rule; 07/20/2026
Clinical Laboratory Improvement Amendments of 1988 (CLIA) Virtual Access, Gynecologic Cytology Proficiency Testing (PT), Personnel Qualification Requirements, and Other Changes (CMS-3478); Proposed Rule; 07/20/2026
Regulatory Alignment for Predictable and Immediate Device (RAPID) Coverage Pathway (CMS-3487); Notice; 07/23/2026
FDA
Substances Generally Recognized as Safe; Proposed Rule; 12/01/25
Cannabidiol (CBD) Products Compliance and Enforcement Policy; Notice; 03/13/2026
Use of Salt Substitutes to Reduce the Sodium Content in Standardized Foods; Final Rule; 04/20/2026
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
Administrative Detention of Tobacco Products; Proposed Rule; 07/09/2026
U.S.-Origin Statements on Seafood; Draft Guidance for Industry; Notice; 07/10/2026
HEARINGS
Senate
HELP Committee
July 30; 9:45 AM EST; 430 Dirksen
Health care nominations under consideration:
Dr. Erica Schwartz to be the CDC Director
Sean Kaufman to be Assistant Secretary for Preparedness and Response for HHS
Health care bill under consideration includes:
S. 3097, Health Information Privacy Reform Act
REPORTS
Office of Inspector General (OIG)
On July 20, HHS OIG issued an audit report finding that Novitas Solutions, Inc., a Medicare contractor, improperly paid an estimated $19.5 million for selected Medicare Part B services provided to patients residing in nursing homes. The audit found that 91 of 150 sampled claims did not meet Medicare requirements for evaluation and management, psychotherapy, or podiatry services, and attributed the payments to insufficient contractor oversight of provider billing and education. OIG recommended that Novitas implement additional oversight and provide annual provider education, and Novitas concurred.
On July 21, HHS OIG issued an audit report finding that Colorado did not always comply with federal and state requirements when claiming federal Medicaid reimbursement for personal care services (PCS) and did not verify that all PCS visits were recorded in its Electronic Visit Verification (EVV) system. Based on a sample of 160 claims, OIG recommended that the state refund an estimated $8 million in federal overpayments and work with CMS to determine the allowability of an additional estimated $45.7 million that OIG set aside. Colorado disagreed with most of the findings and recommendations.
On July 21, HHS OIG issued an evaluation examining how states use contract requirements and other practices to improve the volume and quality of Medicaid managed care organizations' (MCOs) provider fraud referrals. OIG found that state contracts varied in how they defined referable fraud and in required referral timeframes, which ranged from 1 day to 270 days, and that some states did not specify consequences for noncompliance or provide referral training to MCOs. OIG recommended that CMS work with states to strengthen contractual referral requirements and feedback, and CMS concurred with two of the four recommendations.
On July 22, HHS OIG issued an audit report finding that Wisconsin Physicians Service Insurance Corporation (WPS), a Medicare contractor, made incorrect Part B payments to providers for outpatient services that exceeded the providers billed charges. Of 801 selected claim lines from January 2022 through December 2023, OIG found that 138 were incorrect and resulted in at least $140,182 in overpayments and identified an additional 31 claim lines totaling $76,640 that lacked supporting documentation. OIG recommended that WPS confirm recovery of the overpayments, locate the missing documentation, and enhance its system edits and provider education, and WPS concurred with all recommendations.
Government Accountability Office (GAO)
On July 21, GAO published a report examining efforts by CMS and the Department of Veterans Affairs (VA) to reduce improper payments and manage fraud risks in the MA and VA Community Care programs. GAO reported that MA had an estimated $23.7 billion in improper payments in FY25 (6.1% of outlays) and Community Care had an estimated $608 million (2.4%) in improper payments and found that neither CMS nor VA had conducted a comprehensive fraud risk assessment for its program. GAO recommended that CMS document a detailed plan for expediting Risk Adjustment Data Validation (RADV) audits and that both agencies conduct comprehensive fraud risk assessments. VA concurred with the recommendation, and CMS neither agreed nor disagreed.
On July 22, GAO published a report describing the use of and access to the Individual Longitudinal Exposure Record (ILER), a web application that links service members' and veterans' military toxic exposure data from Department of Defense (DOD) and VA databases. GAO reported that use of the application increased after enactment of the Honoring our PACT Act of 2022 and was driven largely by Veterans Benefits Administration staff processing disability claims, and that clinicians and researchers also used it. GAO noted that service members gained access to their own records in March 2026 and that officials plan to provide veterans access by October 2026.
ADDITIONAL POLICY NEWS
On July 17, JAMA Health Forum published a study examining how compounding pharmacies have altered GLP-1 products following FDA enforcement against compounding copies of approved semaglutide and tirzepatide. Based on secret-shopper calls to weight-loss clinics and medical spas in West Virginia and Oklahoma from August to October 2025, the study found that of 75 businesses offering compounded GLP-1 products, nearly 59% confirmed their products contained an additional ingredient, most commonly B vitamins. The authors stated that the findings suggest some compounders added ingredients after FDA resumed enforcement, raising oversight questions for the market.
On July 21, the U.S. Court of Appeals for the District of Columbia Circuit upheld a prior decision holding that Section 340B of the Public Health Service Act does not permit drug manufacturers to impose proposed rebate models on 340B purchasers unless the HHS Secretary has affirmatively provided for or approved such a mechanism. The court stated that the statute places the Secretary, not manufacturers, in control of administering the 340B Program.
On July 22, a group of 61 pharmaceutical and biotechnology executives, companies, and investors filed an amicus brief with the U.S. Court of Appeals for the Fifth Circuit in litigation between Louisiana and the federal government over FDA regulation of the abortion medication mifepristone. The brief argued that a ruling overturning long-standing FDA rules for the drugs would place the stability of the biomedical innovation system at risk, warning that companies would be more hesitant to invest in developing future medications if regulatory decisions could be reversed years after taking effect.
On July 22, a Wall Street Journal analysis of CMS data reported that the No Surprises Act's independent dispute resolution (IDR) process awarded nearly $15 billion to providers in 2025, more than triple the $4.08 billion awarded in 2024. The analysis reported that specialties including radiology, anesthesiology, and emergency medicine received large shares of the awards and that arbitrators accepted insurers' proposed payment amounts in roughly one-fifth of cases or fewer.
On July 22, Better Medicare Alliance (BMA) released an analysis examining out-of-pocket spending among MA and Medicare fee-for-service (FFS) beneficiaries. Based on Medicare Current Beneficiary Survey data and controlling for age, income, and health status, the analysis reported that MA beneficiaries’ average out-of-pocket costs were $2,824 (36%) lower than those in than FFS in 2023, and that the difference grew 16% from 2022 to 2023. BMA reported that MA beneficiaries reported similar satisfaction with care quality and access despite spending less.
On July 23, the Governors Public Health Alliance, representing Democratic governors from 14 states, filed an amicus brief urging a federal appeals court to uphold a district court order that halted changes to the CDC’s vaccine advisory panel, the Advisory Committee on Immunization Practices (ACIP). The brief supports a legal challenge brought by the American Academy of Pediatrics and other medical groups against HHS Secretary Robert F. Kennedy, Jr.'s changes to federal vaccine policy. The alliance argued that the reconstitution of ACIP and departure from prior vaccination policy had increased costs to states and led them to develop their own alternative guidance.
On July 23, the consumer advocacy group Public Citizen filed a citizen petition asking FDA to prohibit direct-to-consumer (DTC) advertising of prescription drugs. The petition argued that such advertising can mislead consumers and that a ban would be constitutional because it would advance a government interest in reducing health-related costs and promoting evidence-based medicine. The petition follows a 2025 FDA enforcement effort on deceptive advertising and a planned FDA rule, expected by the end of the year, that would revise how drugmakers meet safety-disclosure requirements in broadcast advertisements.
On July 23, the U.S. Court of Appeals for the Tenth Circuit reversed a prior district court ruling and held that the Public Readiness and Emergency Preparedness (PREP) Act provides blanket immunity from contract claims in a lawsuit alleging injury during AstraZeneca’s U.S. Covid-19 vaccine trial. The three‑judge panel concluded that the federal shield law bars contract‑based claims tied to administration of a covered countermeasure and remanded to the lower court to decide whether AstraZeneca’s informed consent form waived that immunity.