IHPP - Weekly, July 7, 2025

Summary

On the 4^th of July, President Trump signed the One Big Bill Act (H.R. 1) into law (Impact Summary). The law features the following significant health policy changes:

• Medicaid: Work requirements no later than December 31, 2026, new restrictions on provider taxes and state directed payments, and more frequent eligibility determinations
• ACA Marketplace: New verification requirements and restrictions on premium tax credit eligibility, and elimination of limitation on recapture of premium tax credits
• Prescription Drugs: Orphan drug exclusion expansion and clarification for the Medicare Drug Price Negotiation Program
• Medicare: Temporary payment increase of 2.5 percent to the conversion factor for providers paid under the Medicare Physician Fee
  Schedule for CY 2026
• Rural Health: A Rural Health Transformation Fund providing $50 billion over five years, FY 2026 through FY 2031

The Senate is back in session tomorrow, while the House is in recess this week and will resume on July 14. With the work complete on the Republicans’ budget reconciliation process, for now, Congress turns its attention to the White House-requested recission package and fiscal year (FY) 2026 appropriations. Additional details on each effort follow:

• Recissions Package: Earlier in June, the House approved, R. 4, the Recissions Act of 2025, which would claw back $9.4 billion of Congressionally appropriated funds, as identified by the Department of Government Efficiency (DOGE), for foreign aid programs, such as global health programs and international disaster assistance, as well as funding for NPR and PBS. Congress has until July 18 to pass the package and the Senate is expected to vote on the package no earlier than next week.
• FY 2026 Appropriations: Congress is also facing the September 30 deadline for the FY 2026 appropriations process. Thus far, the House has passed the Military Construction-Veterans Affairs, and Related Agencies Appropriations Act and advanced four other appropriations bills out of committee, while the Senate will begin marking up is first set of bills this Thursday. It is House Appropriations Committee Chair Tom Cole’s (R-OK) goal to advance all twelve appropriations markups by July 30, with the House Appropriations Subcommittee expected to markup the FY 2026 Labor, Health and Human Services, Education, and Related Agencies Bill on July 21. While each chamber is working towards advancing the individual appropriations bills, Congress may pursue a continuing resolution (CR) given the tight timeline and the need for such a package to be passed on a bipartisan basis.
• Potential Additional Reconciliation Bills: On Fox News Sunday, House Speaker Mike Johnson (R-LA) expressed a desire to pursue two additional reconciliation bills, one in the fall and one in the spring. However, given the tight time constraints for the FY 2026 appropriations process and the difficulty Republicans had in advancing their first reconciliation package, the likelihood of Republicans passing a reconciliation bill this fall appear low.

Regulatory Update

The Office of Management and Budget is reviewing the following:

Medicare

• • Proposed CY 2026 payment updates for physicians and hospital outpatient departments and ambulatory surgical centers, These proposed rules are expected soon.
  • Final FY 2026 payment updates to the hospital inpatient prospective payment system for acute care hospitals and long-term care hospitals. This final rule is typically published around August 1,

Medicaid

• • A final rule titled, “Medicaid Eligibility Changes Under the Affordable Care Act of 2010; Giving States Freedom to Use Immigration Information to Determine State Residency for Medicaid Eligibility.” The final rule is part of the Trump administration’s efforts to increase federal oversight on states using Federal Medicaid funding for the health care of undocumented immigrants.
  • A proposed rule titled, “Medicaid Managed Care-State Directed 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.”
• Federal Public Benefit. A notice from the Office of the Secretary titled, “Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA); Interpretation of “Federal Public Benefit.”
• 340B Program. A notice from the Health Resources and Services Administration titled, “340 Rebate Guidance.”