IHPP - Impact Weekly, April 6, 2026

Summary

Congress is still in recess and will return next Monday to a growing to-do list. It includes funding the Department of Homeland Security, negotiating a defense supplemental deal, confirming a new attorney general, holding hearings on the President’s FY 2027 budget, and starting the budget reconciliation process. President Trump wants a reconciliation bill on his desk by June 1.

 

Health care will be in the spotlight when HHS Secretary Kennedy testifies on the HHS budget, which requests a 12.5 percent decrease from the FY 2026 enacted level. This includes a $5 billion cut to NIH and other substantial cuts across the department. The budget also renews its proposal to create an Administration for a Healthy America that would consolidate major functions currently housed in SAMHSA, HRSA, CDC, and the Office of the Assistant Secretary for Health. Among the issue Democrats will raise, health care affordability is likely to be top of mind, especially after Sens. Wyden and Sanders called for Senate Finance Committee and HELP leaders to hold a hearing with insurance CEOs.

 

Though John Thune (R-SD) has said reconciliation 2.0 will be narrowly focused on ICE and CBP funding, health care could come up as members contemplate potential pay-fors.

 

This week, CMS is expected to release the final Calendar Year (CY) 2027 Medicare Advantage (MA) Capitation Rates and Part C and Part D Payment Policies (Rate Announcement). The Advance Notice (Impact summary) proposed only a 0.09 percent payment increase and included significant changes to risk adjustment. Most notably, the proposed rule would recalibrate the CMS-HCC Risk Adjustment Model to update the data and denominator years, exclude diagnoses from audio-only encounters, and exclude diagnoses from unlinked chart review records. Plans argue that the Advance Notice fails to adequately capture the growth in spending and utilization in 2025, and some opposed the risk adjustment changes following the phase-in of the v28 model that just finished last year. Many stakeholders supported the exclusion of unlinked chart reviews, but some recommend certain exceptions or a delay to prepare for implementation. We will be watching to see whether the agency is responsive to industry feedback, especially regarding the payment update and risk adjustment proposals.

 

Last week, CMS released all FY 2027 Medicare payment proposed rules except for the Inpatient Prospective Payment System/Long-term Care Hospital Prospective Payment System, which we anticipated will be released soon. Our summaries are linked below.

 

Both MedPAC and MACPAC will meet this Thursday and Friday. The Impact team will cover sessions highlighted in our calendar.

 

Regulatory Update

The Office of Management and Budget completed its review of the following:

• Medicare Advantage and Part D. CY 2027 Rate Announcement
• Immigration Status. A Department of Labor proposed rule titled, “Improving Wage Protections for H-1B and PERM Employment in the United States.”

 

OMB is also reviewing:

 

• Coverage and Payment:
  • Medicaid:
    • State Directed Payments. A proposed rule titled, “Medicaid Managed Care State Directed Payments and Medicaid Fee-For-Service Targeted Medicaid Practitioner Payments.” The proposed rule appears intended to advance a presidential memorandum released on June 6, which directs HHS to “eliminate waste, fraud, and abuse in Medicaid, including by ensuring Medicaid payments rates are not higher than Medicare, to the extent permitted by applicable law.” On February 27, the title of the proposed rule was revised to include Medicaid FFS targeted Medicaid practitioner payments.
    • Medicaid Tax Waivers. A proposed rule titled, “Amending the Indirect Hold Harmless Threshold of Health Care-Related Taxes.”
    • Work Requirements. An interim final rule titled, “Establishing State Community Engagement Requirements for Certain Individuals Under Section 1902(xx) of the Social Security Act.”
  • Medicare Advantage:
    • Payment: CY 2027 Medicare Advantage and Part D Rate Announcement
  • No Surprises Act. A final rule titled, “Independent Dispute Resolution Operations.” Thing long-awaited rule was proposed in November 2023 by the Biden Administration.

 

• Prescription Drugs
  • Prior Authorization. A proposed rule on interoperability standards and prior authorization for drugs.
  • Price Negotiation. A proposed rule titled, “Medicare Drug Price Negotiation Program.”

 

• Oversight and Integrity
  • Accrediting Organizations. A final rule titled, “Strengthening Oversight of Accrediting Organizations (AO), Burden Reduction, and Related Provisions.”

 

• Nutrition
  • Work Requirements. A proposed rule titled, “Supplemental Nutrition Assistance Program: Modification to Work Requirements for Able-Bodied Adults.”
  • Categorical Eligibility. A proposed rule titled, “Supplemental Nutrition Assistance Program: Reforming Categorical Eligibility.”

 

• Other Topics:
  • An interim final rule titled, “Unaccompanied Children Program Foundational Rule; Update to Include Proof of Identity and Income Verification Standards.”
  • Medication-Assisted Treatment. A final rule titled, “Implementation of the SUPPORT Act: Dispensing and Administering Controlled Substances for Medication-Assisted Treatment.”
  • A final rule titled, “HIPAA Privacy Rule: Changes to Support Coordinated Care and Individual Engagement and Reduce Regulatory Burdens.”