Health Care Watch: September 27, 2026
The following Federal Health Policy (FHP) Strategies Weekly Health Care Watch provides a summary of legislative and regulatory health care activities from September 20 – September 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 September 25, Democrats released their Cost-of-Living Healthcare Working Group memo to Minority Leader Hakeem Jeffries (D-NY). The memo includes Democratic priorities for the 120th Congress. Leader Jeffries convened the working group, which was led by Reps. Alexandria Ocasio-Cortez (D-NY) and Terry Sewell (D-AL), in June. The group met with 139 House Democrats and requested feedback from 145 outside stakeholders. Leader Jeffries also formed affordability work groups on caregiving, groceries and goods, gas and utilities, and housing. The memo identifies policies to consider for advancement in the first 100 hours, 100 days, and year of the 120th Congress including: repealing the One Big Beautiful Bill Act; improving affordability by addressing consolidation and monopolies; expanding access to preventive care; investing in the health care and care workforce; advancing food safety and protecting families; and increasing access to innovations. The document contemplates policies including Medicare for All, a government-run plan, expansion of the Inflation Reduction Act drug pricing negotiations, and access to innovative medicines to treat End-Stage Renal Disease.
The House is in recess and is scheduled to return on November 9.
Senate
On September 23, Finance Committee Ranking Member Ron Wyden (D-OR) sent a letter to the Department of Health & Human Services (HHS) Chief Counselor Chris Klomp, requesting copies of the Most-Favored-Nation (MFN) drug pricing agreements that the administration has signed with pharmaceutical manufacturers. The letter argues that the administration has not provided the agreements despite requests since December 2025. The letter also requests documents related to the GENEROUS model, TrumpRx, tariff relief, priority review vouchers, or exemptions from future Medicare payment models provided to manufacturers connected with the agreements. A response is requested by September 30.
On September 23, Sens. Ben Ray Luján (D-NM) and Tom Cotton (R-AR) introduced the Timely Access to Coverage Decisions Act, legislation intended to make Medicare coverage determinations more timely, transparent, and evidence-based. The bill would require Medicare Administrative Contractors (MACs) to determine whether requests for new or reconsidered Local Coverage Determinations (LCDs) are complete within 60 days. It also would require MACs to hold public meetings on proposed LCDs, give advance notice of meeting agendas, solicit input from expert panels that include patients, physicians, and industry stakeholders, and publicly release meeting records. In addition, final LCDs would need to be a logical outgrowth of the proposed LCD. Notably, the bill would also provide for additional Centers for Medicare & Medicaid Services (CMS) review following certain completed LCD reconsideration requests.
On September 23, the Special Committee on Aging held a hearing titled "Leveling the Playing Field: Restoring America's Edge in Generic Drug Manufacturing." Members and witnesses mainly discussed country-of-origin labeling under the Clear Labels Act, reforms to 180-day generic exclusivity, the Food & Drug Administration (FDA) priority review for domestically manufactured generics, unannounced inspections of foreign facilities and higher foreign facility user fees, reimbursement, and federal procurement incentives for domestically made drugs.
On September 24, the Finance Committee held a hearing to recommend confirmation of Chris Klomp as Deputy Secretary of HHS. The committee voted 15-12 in favor of Mr. Klomp’s nomination.
On September 24, the Health, Education, Labor, and Pensions (HELP) Committee held a hearing on the nomination of Dr. Heidi Overton to be FDA Commissioner. Members questioned Dr. Overton on the safety of the measles, mumps, and rubella vaccine, the independence of FDA product decisions from political influence, FDA's ongoing mifepristone safety review and risk evaluation and mitigation strategy, recent authorizations of flavored vaping products and tobacco application review, food safety and FDA staffing levels, and U.S. competitiveness with China in clinical trials.
On September 24, the HELP Committee postponed votes on the nominations of Dr. Nicole Saphire (Surgeon General), Dr. Timothy Westlake (the Substance Abuse and Mental Health Services Administration (SAMHSA) Administrator), and Mary Lazare (Assistant Secretary for Aging), due to member attendance issues.
On September 24, Sen. Mark Warner (D-VA) introduced the Health for the Commonwealth through Affordability, Reform, and Expansion Act of 2026 (Health CARE Act), wide-ranging legislation intended to lower health care costs, expand coverage, and improve access to care. The bill would make enhanced Affordable Care Act (ACA) premium tax credits permanent, establish a low-cost public health insurance option, and reinstate the higher federal Medicaid match for states that newly expand Medicaid and apply it retroactively to states that expanded late. It also would expand the Medicare Drug Price Negotiation Program; extend Medicare-negotiated drug prices, prescription-drug out-of-pocket limits, inflation rebates, and insulin cost-sharing protections to group and individual coverage; and prohibit PBM spread pricing in Medicaid, among other provisions. A section-by-section summary can be found here.
WHITE HOUSE
On September 25, President Donald Trump informed Congressional leaders that he will cancel nearly $1 million in Congressionally-appropriated funding. The “pocket recission” will impact funding that was earmarked for immigration services, foreign aid, education programs, health research, and assistance for minority-owned businesses.
REGULATORY UPDATE
On September 21, HHS announced a series of agency-wide actions to accelerate the use of human-based research methods and reduce reliance on animal testing. As part of the announcement, the National Institutes of Health (NIH) outlined more than $88 million for biomedical infrastructure projects and a challenge offering more than $7 million in awards for quantum-enabled approaches to improve detection and measurement in laboratory-based New Approach Methodologies (NAMs). NIH also announced a new laboratory at the NIH Clinical Center using human organoid models and an RFI on the feasibility of an annual public report on the number of vertebrate animals used in NIH-funded research.
On September 21, CMS released preliminary calendar year (CY) 2027 payment rates and supporting private payor data for the Medicare Clinical Laboratory Fee Schedule (CLFS), which CMS estimated will save $1 billion annually. CMS stated that the data show Medicare has paid about 16% more than private payors for laboratory services, and that reductions will be phased in through 2029 under the statutory 15% annual cap. Comments on the preliminary rates are due October 21, and CMS anticipates finalizing CY 2027 rates in November. A press release can be found here. A fact sheet can be found here.
On September 21, CMS announced $74 million in Rural Health Transformation Program (RHTP) funding for New Mexico to support six Regional Hub Organizations under Healthy Horizons, part of the state's five-year RHTP strategy. According to CMS, the hubs will coordinate with local providers and community partners to expand access to specialty, maternal, behavioral health, and chronic disease care in rural, frontier, and Tribal communities. CMS stated that the award is one part of New Mexico's total fiscal year 2026 RHTP funding.
On September 21, FDA issued a direct final rule on "Nonclinical Testing Terminology" and a companion proposed rule updating its regulations to replace terms such as "animal tests" and "animal studies" with "nonclinical tests" and "nonclinical studies," defined in line with the Food and Drug Omnibus Reform Act of 2022 (FDORA). FDA stated that the rule does not prohibit animal studies, change evidentiary standards, or impose new requirements on drug developers. If FDA receives significant adverse comments on the direct final rule, the agency will withdraw it and proceed under the companion proposed rule. Comments are due December 7. A press release can be found here.
On September 22, CMS announced that it is canceling approximately 315,000 unauthorized enrollments covering more than 760,000 individuals in the Federally facilitated Exchange (FFE), which CMS stated is expected to result in the return of approximately $2.2 billion in subsidies. CMS also announced the creation of an FFE anti-fraud coordination group of CMS and HHS leadership. Additionally, CMS issued an interim final rule establishing a temporary moratorium on new registration for the 2027 plan year for agents and brokers without an active 2026 Exchange agreement, stating that agents and brokers who first registered for the 2026 plan year accounted for a disproportionate share of unauthorized enrollments. Comments on the rule are due November 21. A fact sheet can be found here.
On September 22, CMS announced more than $45 million in RHTP funding for Missouri, including approximately $35 million for 20 rural hospital projects, up to $6.4 million to connect rural providers with behavioral health and perinatal specialists, and up to $4.2 million for rural emergency medical services (EMS) workforce training. CMS stated that the award is one part of Missouri's total fiscal year 2026 RHTP funding.
On September 23, FDA released an RFI on "Improving Patient Access to Deceased Donor Islet Cells and Cell Products." The RFI seeks comment on whether the current FDA biological product framework creates barriers to patient access and whether "unmodified" deceased donor islet cells should instead be classified as organs for transplantation. Under that approach, oversight could move to the Health Resources & Services Administration (HRSA) and the Organ Procurement and Transplantation Network (OPTN). HHS stated that it has not made a final determination, and comments are due November 8.
On September 23, HRSA announced $51 million in awards to 28 HRSA-funded health centers through the Quality Improvement Fund - Improving Access to Dental Services for Children with Neurodevelopmental Disorders (QIF-DNDD). According to HRSA, the funding will support preventive and other dental services, workforce development, and evaluation of care models for children with conditions including autism spectrum disorder, Down syndrome, cerebral palsy, and intellectual disabilities.
On September 23, an FDA advisory committee voted to recommend approval of Grail’s Galleri blood test, which is designed to detect signals associated with multiple cancers in adults age 50 and older. The committee voted 10-0 that there was reasonable assurance of the test’s safety, 6-4 that there was reasonable assurance of effectiveness, and 7-2, with one abstention, that the test’s benefits outweigh its risks for the proposed population. Panelists noted the test’s potential to identify cancers that lack routine screening options, while raising concerns about false reassurance following negative results and unnecessary diagnostic workups after positive results. FDA is not required to follow the committee’s recommendation.
On September 24, CMS issued an RFI on establishing standards for "reasonable and relevant" pharmacy contract terms and conditions under Medicare Part D, as required by section 6223(a) of the Consolidated Appropriations Act, 2026. The standards CMS develops from the RFI will govern the terms under which Part D plans contract with network pharmacies beginning January 1, 2029. Those terms (e.g., reimbursement rates, dispensing fees, network-participation requirements) can affect a pharmacy’s ability and willingness to dispense certain drugs. Comments are due November 23.
On September 24, CMS announced nearly $23 million in RHTP funding for Delaware to support the state's three Federally Qualified Health Centers (FQHCs). According to CMS, the funding will support electronic medical record upgrades, remote patient monitoring, cybersecurity, expanded care teams, and care coordination, as well as two new mobile health units and a passenger van to expand access to care in rural and agricultural communities. CMS stated that the award is one part of Delaware's total fiscal year 2026 RHTP funding.
On September 24, CMS announced $54.6 million in RHTP funding for Arkansas to support 54 projects, including $27.4 million for 30 projects on nutrition, physical activity, preventive care, and chronic disease management, and $27.2 million for 24 projects on rural health care workforce recruitment, training, and retention. According to CMS, the projects include mobile preventive screenings; new rural residency and clinical training programs; and emergency medical technician, nursing, maternal health, and behavioral health workforce development. CMS stated that the award builds on $149.3 million previously announced for Arkansas and completes the state's initial year 1 award cycle.
On September 24, CMS announced $13 million in RHTP funding for South Dakota, including 12 modernization and infrastructure grants to providers participating in the state's Certified Community Behavioral Health Clinic (CCBHC) initiative. According to CMS, the funding will support the creation of a same-day, 24/7 mobile crisis response service and expand behavioral health provider capacity and workforce. CMS stated that the award builds on $120 million previously announced for South Dakota for health IT modernization, cybersecurity, interoperability, and care coordination.
On September 25, SAMHSA announced $247.9 million in grants for addiction treatment, overdose prevention, mental health services, and recovery support. The awards include $69.4 million to expand access to medications for opioid use disorder (MOUD), $54.9 million for Project AWARE to support school-based mental health services, $41.8 million for community trauma treatment centers under the National Child Traumatic Stress Initiative, and $34.6 million to train first responders and community members to administer overdose reversal medications.
On September 25, HRSA announced $89.3 million through the Rural Communities Opioid Response Program (RCORP) to expand substance use disorder prevention, treatment, and recovery services in rural communities in 45 states and one territory. The awards include $62.7 million for integrated substance use disorder treatment and recovery services, $12.6 million for overdose response, $10 million for technical assistance to RCORP recipients, and $4 million for community planning. RCORP is administered by HRSA's Federal Office of Rural Health Policy.
On September 25, CMS announced Investing in Health Outcomes, a voluntary initiative with 37 state partners intended to shift Medicaid and Children’s Health Insurance Program (CHIP) quality measurement from process- and reporting-focused measures toward demonstrable health outcomes. Participating states will commit to a Medicaid Quality Pledge centered on four principles: prioritizing prevention, chronic-disease management, and behavioral-health outcomes; streamlining quality-measure inventories; advancing digital quality measurement using near-real-time data where feasible; and aligning financial accountability with outcomes-oriented measures. Participating states will develop health-outcome targets and identify opportunities to incorporate outcomes-oriented measures into state quality strategies and future procurements.
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
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
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
Transparency in Coverage (CMS-9882); Final Rule; 07/27/2026
Comprehensive Regulations to Uncover Suspicious Healthcare (CRUSH) (CMS-6098); Proposed Rule; 08/07/2026
Amendments to Rules Governing Organ Procurement Organizations (CMS-3409); Final Rule; 08/20/2026
Medicare Drug Price Negotiation Program (CMS-4215); Final Rule; 09/09/2026
CY 2027 Hospital Outpatient PPS Policy Changes and Payment Rates and Ambulatory Surgical Center Payment System Policy Changes and Payment Rates (CMS-1850); Final Rule; 09/17/2026
CY 2027 Changes to the End-Stage Renal Disease (ESRD) Prospective Payment System and Quality Incentive Program (CMS-1846); Final Rule; 09/17/2026
Draft Program Instructions for Identifying Essential Pharmacies and Affiliated Retail Pharmacy Data Collection: Section 6223(b) of the Consolidated Appropriations Act, 2026 – 30-Day Comment Period; Notice; 09/21/2026
CY 2027 Home Health Prospective Payment System Rate Update and Home Infusion Therapy Services Payment Update (CMS-1844); Final Rule; 09/21/2026
FDA
Cannabidiol (CBD) Products Compliance and Enforcement Policy; Notice; 03/13/2026
Action Levels for Cadmium in Processed Food Intended for Babies and Young Children; Draft Guidance for Industry; Notice; 05/22/2026
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
White Paper: Proposed Definition of Ultra-Processed Food; Notice; 08/03/2026
Use of Formaldehyde and Formaldehyde-Releasing Chemicals as an Ingredient in Hair Smoothing Products or Hair Straightening Products; Proposed Rule; 08/06/2026
Cheeses and Related Cheese Products; Proposal to Permit the Use of Ultrafiltered Milk and Microfiltered Milk; Final Rule; 08/28/2026
Sunlamp Products; Amendment to the Performance Standard; Final Rule; 09/09/2026
Validation of Certain In Vitro Diagnostic Devices for Emerging Pathogens During a Section 564 Declared Emergency; Guidance for Industry and Food and Drug Administration Staff; Availability; Notice; 09/10/2026
Postapproval Manufacturing Changes to Biosimilar and Interchangeable Biosimilar Products: Questions and Answers; Guidance for Industry; Availability; Notice; 09/11/2026
Regulatory Considerations for Prescription Drug Use-Related Software; Guidance for Industry; Availability; Notice; 09/15/2026
Potency Assurance for Cellular and Gene Therapy Products; Guidance for Industry; Availability; Notice; 09/17/2026
REPORTS
HHS Office of Inspector General (OIG)
On September 21, HHS OIG released an audit that found that New York State made unallowable Medicaid managed care capitation payments totaling $7.55 million ($6.16 million federal share) on behalf of all 1,375 incarcerated enrollees included in the audit. OIG recommended that New York refund the federal share and strengthen its policies and procedures for identifying incarcerated individuals enrolled in Medicaid managed care. New York officals did not indicate whether they concurred with the recommendations but described steps they have taken and plan to take in response.
On September 21, HHS OIG released an evaluation that found limitations in CMS’ process for checking the accuracy of state-submitted medical loss ratio (MLR) data for Medicaid managed care plans. OIG found that CMS performed limited accuracy checks on the four required MLR data elements, did not follow up with states that submitted potentially inaccurate data, and did not share the results of its checks with staff responsible for reviewing managed care capitation rates. OIG made three recommendations, including that CMS establish procedures to address potentially inaccurate state MLR data. CMS concurred with the recommendations.
On September 24, HHS OIG released a data brief that found that CMS' application of its price-substitution policy to Medicare Part B drugs identified and referred by OIG has saved Medicare and its enrollees $78 million since 2013, including $1.6 million from price substitutions for 14 drugs based on 2024 average sales price (ASP) data. OIG stated that CMS has implemented price substitutions for 101 drugs since 2013. OIG also found that potential errors in manufacturer-submitted average manufacturer price (AMP) data prevented it from determining whether 31 drugs qualified for a price substitution and encouraged CMS to continue working with manufacturers to review potential data errors.
Government Accountability Office (GAO)
On September 21, GAO released a report that examined FDA’s oversight of its Third Party Review Program, under which FDA-accredited organizations conduct initial reviews of certain low-to-moderate risk medical device 510(k) submissions. GAO found that FDA's audit policies for the program lack key details, including time frames for completing audits and communicating results to third parties, and identified several recent audits with deficiency findings that took FDA more than six months to close. GAO recommended that FDA update its audit policies, including by establishing target time frames, and HHS concurred.
On September 24, GAO released a report that examined how the Department of Labor (DOL), CMS, and states oversee private health plans' compliance with federal requirements to cover contraceptives without cost-sharing. GAO found that DOL identified noncompliance in three investigations over the past six years, including a pharmacy benefit manager that required enrollees to try other contraceptive methods before covering their preferred method at no cost. CMS identified noncompliance in three of five market conduct examinations over the same period, and according to agency officials, the plans involved in the cited examples revised their practices and reprocessed the associated claims. The report contains no recommendations.
ADDITIONAL POLICY NEWS
On September 18, a coalition of Medicaid beneficiaries, physician and health organizations, and the city of Columbus, OH, filed a lawsuit in the U.S. District Court for the District of Maryland challenging the CMS interim final rule implementing Medicaid work requirements. Plaintiffs, including the American College of Physicians and the American Academy of Pediatrics, argued that the rule violated the Administrative Procedure Act by requiring individuals in statutory "medically frail" categories to additionally show that their condition "significantly impairs" their ability to meet the requirements, and by restricting exemptions for people with substance use disorders based on length of recovery. The complaint cited an outside analysis estimating that the rule's provisions would increase annual coverage losses from about 6.4 to 8.2 million people.
On September 22, AHIP released an analysis that found that hospital services and prescription drugs together account for nearly two-thirds of commercial health insurance premium dollars, based on average data from the 2022–2024 benefit years. According to the analysis, over 83% of Americans’ premium dollars directly go to cover the cost of hospital-based services, prescription drugs, doctor visits, and outpatient care, where hospital costs account for more than $0.40 of every premium dollar, prescription drugs account for nearly $0.25, and doctor visits and outpatient services account for nearly $0.20.
On September 23, the U.S. District Court for the Northern District of Texas issued a final judgment in Texas v. Kennedy vacating the community integration provisions that the Biden Administration added to the regulations implementing section 504 of the Rehabilitation Act of 1973 in a May 2024 final rule. The ruling granted a joint request by the Department of Justice, on behalf of HHS, and the five plaintiff states Texas, Alaska, Florida, Louisiana, and Montana. The states originally brought the lawsuit in 2024 challenging, among other provisions, the rule’s inclusion of gender dysphoria in the definition of disability. The court dismissed the remaining claims without prejudice. The vacatur applies nationwide. Section 504 itself, the Supreme Court's Olmstead decision, and community integration protections under the Americans with Disabilities Act remain in place.