Summary
At the end of last week, it was reported that the House Energy and Commerce (E&C), Ways and Means (W&M), and Agriculture Committees are delaying the markups for their respective portions of the budget reconciliation package amid internal disagreements amongst House Republicans and shifting priorities from the White House. The markups are now expected to be convened the week of May 12th, putting further pressure on Speaker Johnson’s Memorial Day deadline.
Instead of proposals that would impose large Medicaid funding cuts, such as per capita caps, the White House is now pushing for a Most Favored Nation policy that would tie prescription drug reimbursement more closely to prices paid internationally and would apply to drugs in Medicaid. House Speaker Mike Johnson (R-LA) did not express support for such an approach, while E&C Chair Brett Guthrie (R-KY) was open to the idea.
In light of new policies coming under consideration for reconciliation, we wanted to briefly flag Paragon Health Institute’s recommendations for Medicare reforms for reconciliation:
- Medicare Advantage reforms, including addressing benchmark calculations, the quality bonus program, the risk adjustment program, enrollment, and Medigap;
- Site neutral payments, such as applying physician rates to clinic visits and other common services in on-campus hospital outpatient departments and a unified post-acute care payment system;
- Reducing the 340B subsidy to hospitals and codifying the first Trump Administration’s rule to reduce the Medicare payment for 340B-aquired Part B drugs to the average sales price (ASP) minus 22.5 percent; and
- Removing uncompensated care payments from Medicare, indexing them to inflation, and basing them on a hospital’s share of charity care and non-Medicare bad debt.
We would like to note that such policies have not yet been considered by House Republicans, but offer additional areas in which savings could be achieved outside of Medicaid.
Additional Reconciliation Updates
Last Wednesday, the House Judiciary Committee advanced their portion of the reconciliation package, which primarily focused on advancing the Trump Administration’s immigration policies. The bill also includes provisions of the Regulations from the Executive in Need of Scrutiny (REINS) Act (H.R. 142), which requires any major regulation that increases revenue by $100 million or more to be approved by Congress through a joint resolution. Additionally, for rules currently in effect, agencies must submit relevant rules for Congressional review, and rules that do not receive approval will automatically sunset. However, the package ultimately excluded a provision that would have transferred the Federal Trade Commission’s (FTC’s) antitrust enforcement powers to the Antitrust Division of the Department of Justice (DOJ).
Supreme Court Decisions
In a 7–2 decision last week, the Supreme Court upheld the Department for Health and Human Services’ method for calculating Medicare disproportionate share hospital payments, which counts only inpatient days for patients receiving Supplemental Security Income (SSI) cash benefits during the month of their hospital stay. Hospitals had argued the policy excludes other low-income patients eligible for SSI-related services. In dissent, Justices Jackson and Sotomayor criticized the formula for “arbitrarily undercounting” the low-income population hospitals serve.
Regulatory Update
The Office of Management and Budget is reviewing the following:
- Proposed CY 2026 payment updates for physicians, hospital outpatient departments and ambulatory surgical centers, home health agencies, and end-stage renal disease facilities. These proposed rules are typically published in June or July.
- A proposed rule titled, “Preserving Medicaid Funding for Vulnerable Populations – Closing a Health Care-Related Tax Loophole.” The proposed rule could impact provider taxes, such as those in California and New York.
- ACA Marketplace. A final rule with a series of proposals intended to address improper enrollments in Marketplace coverage and reduce improper federal spending on advanced premium tax credits (IHPP summary). If finalized as proposed, 750,000 to 2 million fewer individuals would enroll in Marketplace coverage in 2026.
- A prerule titled “Transparency in Coverage,” likely with proposed changes to health plan price transparency requirements. The prerule would implement President Trump’s executive order directing the Departments of Treasury, Labor, and Health and Human Services to strengthen price transparency requirements (IHPP summary). At the prerule stage, agencies typically submit an “Advanced Notice of Proposed Rulemaking” to allow the public the opportunity to comment on whether or not a rulemaking should be initiated.
- Health Technology. A request for information on the “health technology ecosystem.”