Weekly Health Care Policy Update – March 7, 2025

In this update: 

• Administration Update
  • Trump Administration to Cut 80,000 VA Jobs
• Legislative Update
  • CBO Report Says GOP Budget Targets Not Attainable Without Medicaid, Medicare, or CHIP Cuts
• Federal Agencies
  • Organ Procurement and Transplant Network Board Seeks New Directors
  • CMS Announces Public Engagement Events for Medicare Price Negotiation Program
  • NIH Cancels Ongoing Grants for LGBTQ+ Research
  • CMS Rolls Back Guidance for HRSA Medicaid Waivers
  • Justice Department Drops Challenge to Emergency Abortion Ban
• Other Updates
  • MACPAC Holds February Meeting
  • KFF Publishes Report on State Impacts of Potential Medicaid Cuts
  • UnitedHealthcare to Cut Prior Authorization by 10%
  • Commonwealth Report Estimates National, State Economic Losses from Enhanced Premium Tax Credit Expiration 
  • Judge Issues Nationwide Preliminary Injunction on NIH Indirect Payment Cuts

Administration Update

Trump Administration to Cut 80,000 VA Jobs 
On March 5^th, the Department of Veterans Affairs (VA) published a memo detailing plans to cut more than 15% of the VA workforce, or roughly 80,000 workers. The effort will be led by the U.S. DOGE Service, headed by Elon Musk. Most of the VA’s 400,000 employees work within the Department’s network of hospitals, providing care to millions of veterans and their families. The VA’s health care system has been plagued by understaffing and long wait times for years. The memo notes that the department will publish a reorganization plan this summer, with cuts scheduled to be complete before September 30^th.

Legislative Update

CBO Report Says GOP Budget Targets Not Attainable Without Medicaid, Medicare, or CHIP Cuts 
On March 5^th, the Congressional Budget Office (CBO) published a report showing that the House Budget target of $880 billion dollars in cuts from programs under the jurisdiction of the House Energy and Commerce Committee are not attainable without decreases to Medicare, Medicaid, or Children’s Health Insurance Program (CHIP) funding. The report was in response to a request from House Budget Committee Ranking Chair Brendan Boyle (PA-02) and House Energy and Commerce Committee Ranking Member Frank Pallone (NJ-06). The report has three key points: 

1. Mandatory outlays for all programs under the jurisdiction of the Energy and Commerce Committee – except for Medicare – total $8.8 trillion for the 2025-2034 period. Medicaid outlays account for $8.2 trillion, or 93%, of the total. 
2. Outlays other than for Medicaid total only $581 billion through 2034. 
3. Outlays other than for Medicaid and CHIP total only $381 billion over the 10-year period. 

The CBO report is available here. 

Federal Agencies

Organ Procurement and Transplant Network Board Seeks New Directors 
On March 3^rd, the Health Resources and Services Administration (HRSA) announced it would begin accepting applications for new members to join the Organ Procurement and Transplantation Network (OPTN) Board of Directors. The OPTN Board is the governing body for oversight of allocation policies, membership, and management, creating a foundational part of the Modernization Initiative. Applications will be reviewed on a rolling basis through April 4^th. OPTN members anticipate voting on a final slate of candidates late summer 2025. 

The announcement, including information on how to apply, is available here. 

CMS Announces Public Engagement Events for Medicare Price Negotiation Program 
On April 30^th, the Centers for Medicare & Medicaid Services (CMS) will host a livestreamed town hall meeting as part of the Medicare Drug Price Negotiation Program. CMS invites patients, caregivers, clinicians, researchers, and other stakeholders to share clinical considerations of the selected drugs including prescribing experiences, treatment management and goals, and therapeutic alternatives. In addition, from April 16^th through 29^th, CMS will hold 15 patient-focused roundtable events, one for each selected drug. Roundtables are open only to patients, patient advocacy organizations, and caregivers who register by March 12^th and are selected to speak. 

More information, including a registration link, is available here and an FAQ document is available here.

NIH Cancels Ongoing Grants for LGBTQ+ Research
On February 28^th, the National Institutes of Health (NIH) began terminating grants to scientists and researchers studying LGBTQ+ health, effective immediately. Per the NIH, these grants do not support agency priorities, claiming that “programs based on gender identity are often unscientific.” This move caught many researchers by surprise, assuming that, while new grants were unlikely to be approved, existing grants were not in danger. Traditionally, grants are seen as a legal contract which the federal government is expected to honor, but the terminations cite a 2022 NIH policy statement that permits grant termination “if an award no longer effectuates the program goals or agency priorities.” Grantees can appeal the cancellation. 

CMS Rolls Back Guidance for HRSA Medicaid Waivers
On March 4^th, CMS issued an informational bulletin (CIB) that rescinds guidance issued during the Biden Administration on opportunities available to states under Medicaid and CHIP to address Health-Related Social Needs (HRSN). The rescinded guidance from November 2023 and December 2024 had laid out a framework for how HRSNs can be covered through the Medicaid program. 

With this rescission, the most up-to-date guidance on the matter appears to be the State Health Official (SHO) letter issued by the previous Trump Administration in its final days in office. While the 2021 SHO letter also outlines ways that states can address social factors under existing Medicaid and CHIP authorities, it is broader and less prescriptive than the rescinded HRSN guidance, which provides explicit guardrails, duration limits, and spending caps for specific HRSN services.

In the CIB rescinding the previous guidance, CMS states that it “will consider states’ applications to cover these services and supports on a case-by-case basis to determine whether they satisfy federal requirements for approval…without reference to the November 2023 and December 2024 CIBs or the HRSN framework.” 

The CIB is available here; the rescinded guidance from November 2023 is available hereand here; the rescinded guidance from December 2024 is available here; and the State Health Official (SHO) letter issued by the previous Trump Administration is available here.

Justice Department Drops Challenge to Emergency Abortion Ban
On March 5^th, the Department of Justice (DOJ) filed a motion to dismiss the lawsuit against the state of Idaho over its emergency abortion ban. The lawsuit, originally filed by the Biden Administration, claimed that Idaho’s near-total abortion ban during medical emergencies violated the Emergency Medical Treatment and Active Labor Act (EMTALA). The case eventually arrived at the Supreme Court in summer 2024, who returned it to the appellate court without offering firm guidance either way, and allowing Idaho providers to provide emergency abortions when necessary. 

The DOJ’s dismissal, though, would now allow Idaho to fully enforce the ban, even in emergency situations. This prompted Idaho U.S. District Court Judge B. Lynn Winmill to grant a temporary restraining order barring Idaho officials from prosecuting providers “for a short period” as the courts regroup. This move, while not unexpected, is one of the first formal actions by the Trump Administration to undo Biden-era abortion protections.

Other Updates

MACPAC Holds February Meeting
On February 27^th and 28^th, the Medicaid and CHIP Payment and Access Commission (MACPAC) held its monthly public meeting. The Commissioners favorably discussed a suite of policies aimed at improving transitions of care for children and youth with special heath care needs, which will be voted on next month. The Commissioners also discussed non-disproportionate share hospital (DSH) supplemental payment and directed payment targeting analyses, the self-directed model, medications for opioid use disorder (MOUD), and 1115 demonstrations for access to substance use disorder (SUD) treatment. 

The slides are available here. 

KFF Publishes Report on State Impacts of Potential Medicaid Cuts 
Recently, the Kaiser Family Foundation (KFF) released new data showing the potential consequences of eliminating the federal Medicaid expansion match rate. Currently, expansion states receive a 90% Federal Medical Assistance Percentage (FMAP) on their expansion population. If Congress eliminated this enhanced rate and states therefore dropped coverage entirely for this population, 20 million Medicaid enrollees would lose coverage, federal Medicaid spending would decrease by 25%, and state spending would decrease by 5% over a ten-year period. In New York, overall enrollment would drop by approximately 2 million beneficiaries (30.1%). 

The KFF data is available here.

UnitedHealthcare to Cut Prior Authorization by 10% 
On March 1^st, UnitedHealthcare announced its intent to cut around 10% of prior authorization requirements in 2025. United will specifically eliminate prior authorizations for home health services managed by Optum Home & Community for Medicare Advantage (MA) and dual-special needs plans (D-SNPs) in over 30 states, effective April 1^st. Optum Home & Community’s AI algorithms  have been the center of a number of probes and lawsuits, with allegations of improper denials of essential post-acute care. This action falls in line with a multi-year plan to lower total prior authorization volume, including a 20% reduction in 2023 and the introduction of a Gold Card program in 2024.

The announcement is available here. 

Commonwealth Report Estimates National, State Economic Losses from Enhanced Premium Tax Credit Expiration
On March 3^rd, the Commonwealth Fund released a report estimating the economic, employment, and tax revenue effects of allowing the enhanced premium tax credits, originally authorized by the American Rescue Plan Act, to expire at the end of 2025 as scheduled. The authors describe a scenario in which reduced premium tax credits cause a cascading economic effect resulting in reduced economic output, job losses, and reduced federal, state, and local tax revenue. The losses are concentrated in the ten states that have not expanded Medicaid. 

The authors find that allowing the enhanced premium tax credits to expire would yield the following effects nationally and in New York in 2026:

The report is available here. 

Judge Issues Nationwide Preliminary Injunction on NIH Indirect Payment Cuts
On March 5^th, Judge Angel Kelley issued a nationwide preliminary injunction on the Trump Administration’s efforts to cap indirect payments on NIH grants. The order will remain in effect as the judge hears full arguments in three lawsuits. Judge Kelley wrote that “it is likely Plaintiffs will succeed on the merits, rendering the [NIH] notice unlawful.” The notice in question would limit indirect costs, which include facility and administrative fees linked to research, to 15%, which the NIH estimates would save $4 billion a year. Indirect costs generally range between 30% and 70%, prompting multiple lawsuits by stakeholders warning of economic and scientific fallout.