In this update:
- Administration Updates
- Trump Administration Imposes Regulatory Freeze
- President Trump Signs Initial Rescission Order
- Trump Administration Freezes External Communications
- Trump Administration Seeks to Withdraw U.S. from WHO
- HHS Leadership Team Announcements
- Legislative Updates
- House GOP Creates List of Potential Reconciliation Pay-Fors
- Federal Agencies
- DoL Issues Mental Health and Substance Use Disorder Parity Report to Congress
- CMS Announces 15 Additional Drugs for Medicare Prescription Drug Price Negotiation
- CMS Announces Record of 24.2 Million ACA Plan Selections for 2025
- Other Updates
- MedPAC Holds January 2025 Meeting
- New York State Updates
- Governor Hochul Releases NYS Fiscal Year 2026 Executive Budget Proposal
- DOH Announces Launch of 1115 Medicaid Waiver HERO, Coordinated by United Hospital Fund
Administration Updates
Trump Administration Imposes Regulatory Freeze
On January 20th, President Trump announced a regulatory freeze pending review. The order requires that no agency propose or issue any rule without review and approval by a presidential appointee. It further orders the immediate withdrawal of any rules that have been sent to, but not published in, the Federal Register for further review. This freeze is slated to last 60 days. As a result of the order, new leadership at the Department of Health and Human Services (HHS) will review proposed rules related to the Health Insurance Portability and Accountability Act (HIPAA) Security Rule and prescribing controlled substances via telehealth.
The announcement is available here.
President Trump Signs Initial Rescission Order
On January 20th, President Trump signed an “initial rescissions” order, revoking dozens of Biden Administration policies, including:
- Affordable Care Act: President Trump rescinded Biden executive orders that allowed for longer enrollment periods for marketplace plans as well as additional funding for navigators;
- Drug Pricing: President Trump rescinded a Biden executive order that led to the creation of three Center for Medicare and Medicaid Innovation (CMMI) drug pricing models (cell and gene therapy, lower payment for accelerated approval products, and $2 generic drugs) that had not yet taken effect;
- Immigration: President Trump rescinded an Obama-era policy that deterred immigration raids in “sensitive locations” including hospitals and schools. Hospitals are still not required to comply with ICE officials without a warrant naming the facility as a location for a search or arrest;
- Gender and Sex Discrimination: Trump rescinded a Biden policy that barred discrimination on the basis of sexual and gender identity in an effort to protect students. The policy also moved to end the operation of programs promoting so-called conversion therapy; and
- Artificial Intelligence (AI): Trump rescinded a recent Biden executive order that sought to establish government-wide practices to mitigate the risks and harness the responsible use of AI. The executive order included policies related to safety testing, algorithm bias, nondiscrimination, and protections for individual data in model training. Trump later promulgated his own executive order on AI (available here) which directs the creation of a new AI Action Plan alongside the overturning of Biden’s policies.
Given that several of the policies were tied to congressional action, these reversals could face legal challenges. A full list of rescission orders can be found here.
Trump Administration Freezes External Communications
On January 21st, the Trump Administration directed staff at agencies within HHS to pause external communications through February 1st. According to a memo from Acting Health Secretary Dr. Dorothy Fink and other staff reports, this directive applies to regular scientific reports, such as those from the Centers for Disease Control and Prevention (CDC), health advisories, and updates to websites. Upcoming communication must be reviewed and approved by a presidential appointee before issuance. Staff were also instructed to not participate in any media engagements without approval.
Trump Administration Seeks to Withdraw U.S. from WHO
On January 20th, President Trump issued an executive order withdrawing the U.S. from the World Health Organization (WHO). President Trump cited a number of reasons for the withdrawal including the “mishandling of the COVID-19 pandemic” and “onerous payments.” During his first term, in 2020, Trump took initial steps to withdraw from the WHO but did not successfully complete the withdrawal. Critically, the withdrawal from the WHO could mean that the CDC would have limited and fragmented access to international data, including on the genetics of novel threats. In addition, the WHO relies heavily on U.S. staff and expertise. It will take roughly a year for the U.S. to fully withdraw, both operationally and financially.
The announcement is available here.
HHS Leadership Team Announcements
Over the past week, various news outlets have reported that President Trump has selected additional individuals to serve in positions at the Department of Health and Human Services:
- Dorothy Fink, career civil servant and head of HHS’s Office on Women’s Health, as Acting Secretary for HHS, until such time as a Secretary is confirmed by the Senate; and
- Heather Flick, a lawyer who served in several senior positions at HHS during the first Trump administration (acting general counsel, acting secretary for administration, and senior advisor to the secretary) for HHS Chief of Staff.
Legislative Update
House GOP Creates List of Potential Reconciliation Pay-Fors
Amid ongoing conversations on a forthcoming reconciliation package, Ways and Means Chair Jason Smith released a list of potential offsets that could potentially pay for tax cuts and immigration legislation. Broken into policy areas, the health section offers insight into the policy priorities of the Republican-controlled Congress. Potential health care policy pay-fors with the highest budgetary impact include:
- Lowering the Medicaid matching rate floor (up to $387 billion in 10-year savings);
- Equalizing the FMAP for ACA expansion populations (up to $561 billion in 10-year savings);
- Establishing Medicaid work requirements (up to $100 billion in 10-year savings);
- Limiting Medicaid provider taxes (up to $175 billion in 10-year savings);
- Imposing Medicaid per capita caps (up to $900 billion in 10-year savings);
- Repealing the Medicaid eligibility rule (up to $164 billion in 10-year savings);
- Repealing the Medicaid/CHIP access rule (up to $121 billion in 10-year savings);
- Streamlining block grant Graduate Medical Education (GME) payments to hospitals (up to $75 billion in 10-year savings);
- Medicare site neutrality for physician offices (up to $146 billion in 10-year savings); and
- Redistributing uncompensated care payments in hospital and non-hospital settings (up to $229 billion in 10-year savings).
The full list is available here. SPG’s slide deck examining the impact of many of these potential cuts is available here.
Federal Agencies
DoL Issues Mental Health and Substance Use Disorder Parity Report to Congress
On January 17th, the Departments of Labor (DoL), HHS, and the Treasury issued their 2024 Report to Congress on the Mental Health Parity and Addiction Equity Act (MHPAEA). The Employee Benefits Security Administration concurrently released its fiscal year (FY) 2023 MHPAEA Enforcement Fact Sheet, summarizing closed investigations and public inquiries related to MHPAEA.
Overall, the report found that group health plans continue to make considerable progress in complying with the Act, but, nonetheless, fall short of full compliance. This analysis was informed by review of insufficiency letters filed by beneficiaries. This report also details actions by the Departments to implement policies set forth in the Consolidated Appropriations Act, 2021 that address utilization management techniques that hamper access to mental health and substance use services. Compliance with MHPAEA was a priority of the Biden Administration, culminating in a set of new rules, finalized in September 2024, that increase enforcement capabilities.
The announcement is available here, the report is available here, and the Enforcement Fact Sheet is available here.
CMS Announces 15 Additional Drugs for Medicare Prescription Drug Price Negotiation
On January 17th, the Centers for Medicare & Medicaid Services (CMS) announced the next 15 additional drugs subject to Medicare Part D drug price negotiations, including Ozempic, Rybelsus, and Wegovy (obesity/diabetes), Trelegy Ellipta (asthma), and Xtandi (prostate cancer). Should drug manufacturers agree to participate, price negotiations for these products will occur in 2025 and negotiated prices will take effect in 2027. Approximately 5.3 million Medicare beneficiaries take these 15 drugs daily, accounting for $41 billion (14%) in total gross covered prescription costs from November 2023 to October 2024. Together with the 10 drugs with negotiations now underway, these 25 products account for one-third of Medicare prescription drug spending. As with many federal health programs, the Trump Administration’s commitment to continuing prescription drug price negotiations in the way that the Biden Administration did remains unclear at this time.
The announcement is available here.
CMS Announces Record of 24.2 Million ACA Plan Selections for 2025
On January 17th, CMS announced that 24.2 million consumers chose Affordable Care Act (ACA) marketplace coverage for plan year 2025, an all-time high. This figure includes 3.9 million new members. In sum, this figure is more than double overall enrollment in the 2021 Open Enrollment Period. The then-Biden Administration attributed surging enrollment to the premium tax credits slated to expire at the end of 2025. According to their estimates, more than 5 million consumers could lose their coverage entirely and millions could face premium increases of more than 50% without an extension of the enhanced credits.
The announcement is available here.
Other Updates
MedPAC Holds January 2025 Meeting
On January 16th and 17th, the Medicare Payment Advisory Commission (MedPAC) held its January public meeting. The Commissioners discussed methods for assessing payment adequacy and updating provider payments, culminating in an endorsement of a tw0-part recommendation to Congress to update the physician fee schedule (PFS) for 2026. The majority of Commissioners supported a draft recommendation to Congress to update the 2025 Medicare base payment rates for general acute care hospitals by the statutory amount plus one percent in 2026. In addition, the Commissioners supported a recommendation to redistribute existing disproportionate share hospital and uncompensated care payments through the Medicare Safety-Net Index (MSNI), while adding $4 billion to the MSNI pool. Other topics of conversation included payment to skilled nursing facilities, eliminating coverage limits on stays in freestanding psychiatric facilities, and a status report on Part D.
The slides are available here.
New York State Updates
Governor Hochul Releases NYS Fiscal Year 2026 Executive Budget Proposal
On January 21st, Governor Kathy Hochul announced highlights from her fourth Executive Budget, covering New York State (NYS) Fiscal Year (FY) 2026, which will run from April 1, 2025 to March 31, 2026. This year, the Division of the Budget notes that overall, New York’s financial position “remains strong,” with favorable operating results during FY 2025 and projections of a continuing strong economy. There is a current year surplus of $5.3 billion, which the Governor proposes to use to support various new investments and proposals. However, DOB also says that “uncertainty looms” due to many factors, including “the new Federal administration” and “sustained trends of rising enrollment and costs in public health insurance programs.”
The Executive Budget includes various health proposals, including many of those outlined in the Governor’s State of the State:
- Enacting the Managed Care Organization (MCO) tax in statute;
- Extending the Safety Net Transformation Program;
- Strengthening oversight and review of “corporate and investor-backed” health care transactions;
- Requiring hospitals to report on community benefit expenses;
- Codifying the “Acute Hospital Care at Home” demonstration program;
- Amending regulations for involuntary commitment and court-ordered outpatient treatment for individuals with mental illness; and
- Implementing a 2.1% “Targeted Inflationary Increase” for eligible mental hygiene and human services programs.
SPG’s full summary of the health care provisions included in the budget proposal is available here. The full budget materials are available here.
DOH Announces Launch of 1115 Medicaid Waiver HERO, Coordinated by United Hospital Fund
On January 24th, the NYS Department of Health (DOH) announced the launch of the Health Equity Regional Organization (HERO), to be coordinated by the United Hospital Fund (UHF). The statewide HERO is the component of the New York Health Equity Reform (NYHER) 1115 Medicaid Waiver and is responsible for conducting regional health and health-related social needs (HRSN) data collection and analysis. The HERO will make recommendations on incorporating HRSN into new policies, interventions, and targeted investments, including future value-based payment (VBP) arrangements. The HERO will also publish program data, including initial health equity reports and baseline data on Medicaid populations.
The DOH press release highlights UHF’s experience analyzing the State’s Delivery System Reform Incentive Payment (DSRIP) program, including identifying lessons learned and promising practices from initial implementation.
The DOH press release is available here.